Broker snap: SThree upgraded

16th Jul 2010 11:05

SThree goes up to 'buy' from 'hold' at Panmure Gordon ahead of the recruitment and contract placement specialist's interim results on Monday.Panmure analysts predict a drop in adjusted profit before tax to £7.6m from £11.2m last year on gross profit of £74.4m compared with £93.3m in 2009."Given the investment that has taken place to date, we expect profitability to be more H2 weighted than last year, with our H1 forecast 35% of the full-year (62% last year; 5-year average 43%)," they said."With a solid yield of 4% still on offer and good cyclical upside potential, we see this as an attractive stock to own, particularly for income investors."In June, chief executive Russell Clements told investors the current deal pipeline suggested the group is experiencing improvements across most markets.The number of permanent deals agreed in the first five months of 2010, with candidates due to start in the second half, was up over 30% year on year.