Credit Suisse ups Hays to 'neutral'

“We expect that the UK market will be challenging through FY17E but this should be offset by FX tailwinds and like for like profit growth in its other operations.”

CS said the outlook for Hays into full-year 2017 is mixed.

On the upside, its underlying markets and competitive position in Europe and Australia remain supportive and the company’s balance sheet is now net cash, which provides opportunities for special dividends if growth remains solid through FY17E.

In addition, Credit Suisse said Hays’ UK business has an experienced and highly capable management team and its IT platform is market leading.

On the downside, it pointed to weak and uncertain markets in the UK, the potential for some contagion into Europe as the UK weakens and rising tax rates as the mix of profitability shifts away from the UK.

“We think that, as conditions in the UK have become more stable and growth in Europe has proved more robust, the risk reward profile is now more evenly balanced.”

At 0828 BST, Hays shares were down 0.5% to 129.50p.