Broker snap: UBS cuts targets for SThree

3rd Dec 2012 10:02

UBS has reiterated its 'buy' recommendation for recruitment group SThree, but has reduced its profit forecasts though this is largely a 'catch-up' with consensus estimates.Fourth-quarter revenues rose 2%, the company announced last week, which was better than specialist recruitment peers (in the calendar third quarter) who registered negative growth, UBS said."Contract strength saves the day, at +11% y/y in 2012, and +11% in Q4. Perms revenue weakening as to be expected, at +6% in 2012 and -5% in Q4 (after +2% in Q3). Sales headcount was down 6% at the year end with UK -18%. Company expects profit before tax (PBT) in line with consensus at £25m," the broker said.Nevertheless, UBS has cut its 2013 estimate by 10% and now expects PBT to come in at £29, in line with the consensus forecast (£30m). Analysts are looking for modest gross profit growth (up 3%) with flattish headcount.However, the broker said: "As ever with staffing it is difficult to call 12 month earnings at this point."The target price has been lowered from 350p to 335p "which continues to be based on an upside/downside scenario basis , in line with other staffers, reflecting earnings cuts".BC