Broker snap: Hays preferred to Michael Page

7th Oct 2009 10:35

The third quarter saw some stabilisation at recruiter Michael Page but broker Charles Stanley reckons things are a long way from getting back to normal and continues to advise its clients to sell the shares.'Conditions have stabilised and the macroeconomic outlook is undoubtedly improved compared to this time last year. However, we still find it difficult to believe that conditions will have sufficiently improved this time next year to warrant such a high valuation,' Charles Stanley analyst Matthew Earl wrote.'In our view, the latest labour market data continue to indicate a very sluggish recovery in employment growth suggesting that 'business as usual' remains a long way off,' he added.If forced to invest in the recruitment sector Charles Stanley would pick Hays over Michael Page. The latter's share price is up by almost 60% from a year ago, and trades at 36 times Charles Stanley's projected full-year 2011 earnings per share for the company, which is a 174% premium to Hays. 'Moreover, Hays has a prospective dividend yield of c5.6% compared to Michael Page yielding c2.4%. However, we note the uncertainty as to whether Hays will maintain its dividend (we should get the answer tomorrow, we believe that it will),' the broker concludes. Hays is due to issue an interim management statement tomorrow.