Numis lifts rating on Robert Walters to 'add' from 'hold'

Numis on Monday raised its recommendation on Robert Walters to ‘add’ from ‘hold’ and lifted its target price to 400p from 275p after the recruitment firm reported its third quarter results.

On 17 October, the group reported a 9% increase in gross profits to £23.4m in the three months ended 30 September. Reported net fees grew 8%, compared to a Numis forecast of 3%, driven by demand in Europe.

“Following the stronger-than-expected Q3 trading performance, and applying recent foreign exchange moves, we have adjusted our enterprise value / net fees valuation model and increased our target price to 400p from 275p.

“The benefits of investment in its recruitment process outsourcing services business are evident during this period and has more than offset the tougher environment in the UK staffing market experienced throughout the sector.”

UK staffing net fees remain under pressure, Numis added, but investment in its resource solutions business over the past two years is “paying off” and delivering double-digit growth. Numis said it believes this is ultimately a “scalable business”.

“We expect further investment in the fourth quarter, and while we increase our group net fee base, our fiscal year profit estimates are unchanged,” Numis said.