Hays had a good 2015 as the majority of regions that it operates in saw higher employment levels. The firm posted an 18% jump in full-year profits, and the UK and Ireland division was the standout performer where the like-for-like net operating profit jumped by 75%.
Both the UK and Ireland have experienced a noticeable drop in the jobless rates, and this is evident in Hays’ numbers. The UK general election in May 2015 prompted employers to hold back in hiring before voters went to the polls, and despite the Conservative majority being welcomed by the business community there has yet to be a bounce back in hiring. If Hays' UK division can have a solid year when a general election caused mild uncertainly, it will be well positioned for 2016.
As I previously stated, currency headwinds will still be a problem for Hays as the euro remains weak, as does the Australian dollar and the rapid cooling of the Brazilian economy will keep putting a dent in its South American operation. Mainland Europe is slowly returning to growth, and the weak euro is spurring growth in the region.
Hays will reveal its first-half results in February 2016, and traders are expecting revenue of £2 billion. The recruiter will announce its full-year figures in August 2016, and the market is anticipating revenue of £4.03 billion and net adjusted income of £126 million. These forecasts equate to a 5% jump in revenue and a 20% increase in adjusted net income.
Investment banks are very bullish on Hays, and out of the 22 ratings, 16 are buys, and six are holds. The average target price is 181p, which is 18% above the current price. Equity analysts are a little less bullish when it comes to Michael Page International, and out of the 21 recommendations, 11 are buys, nine are holds, and one is a sell. The average target price is £5.80, which is 21% above the current price.
The share price has been pushing higher since October 2014, and the resistance at 163p is the initial target, and beyond that dealers will look at 173p. Should the stock drift lower support will be found at 146p, and if that mark is punctured then 140p will provide support.