Broker snap: Jefferies ups target for Hays

12th Apr 2012 10:38

Jefferies has raised its earnings per share (EPS) forecast for recruitment firm Hays after better-than-expected results in the third quarter.Third-quarter net fee growth accelerated to 10% from the 8% rate in the second quarter. Jefferies and consensus estimates were for a 6% increase. As such, the company said it expects full-year (ending June 30th) operating profits to be at the top end of the £108-130m consensus range of forecasts."In our view, net fee growth has bottomed out at a higher level than feared at the end of 2011, and consequently we have raised our Q412E estimate to 5% (from 2%) and FY13E to 5% (from 0%)," the broker said."This, combined with cost reduction initiatives in the UK, should drop through rapidly to profitability."The broker has maintained its buy recommendation on the stock but raised its target price from 110p to 120p.Shares had jumped 10.46% to 89.75p by mid-morning trade.BC