CFRA has adjusted the rating for Randstad NV (RAND: NA) (OTC: RANJF), shifting from Sell to Hold and increasing the price target to EUR48.00 from EUR41.00.
The revision reflects a P/E ratio of 12x for the year 2024, which is slightly below the 5-year average P/E of 12.5x. This valuation takes into account Randstad's muted earnings outlook.
Randstad reported a decline in Q3 2024 organic revenue by 5.9% year-over-year, amounting to EUR6.0 billion. This decrease was particularly pronounced in the North America market, which saw revenues drop by 9% year-over-year, and in Northern Europe, where revenues fell by 8% year-over-year.
Despite the revenue shortfall, Randstad's earnings before interest, taxes, and amortization (EBITA) were EUR196 million, down 29% from the previous year but still ahead of the consensus estimate of EUR185 million.
The company has acknowledged the ongoing tough macroeconomic conditions globally and anticipates a continued slowdown in the jobs market, especially in North America. However, Randstad expects to see stable volumes and a slight sequential rise in gross margin in Q4 2024.
A CFRA analyst noted that while companies may keep a cautious approach to hiring in the short term, improvements in the North American market, coupled with efficient cost management, might contribute to stabilizing the stock's price.
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