RBC Capital downgrades Hays to 'sector perform'

It pointed out that the stock has enjoyed a nice bounce and is one of the better-performing staffers year-to-date.

Still, it remained fairly upbeat, saying that although UK trading is expected to be tough, this will likely be offset by Europe and Australia.

RBC reckoned the company will be able to hold earnings before interest, tax and amortisation slightly above last year thanks to a robust picture in Europe and solid momentum in Australia, as well as a significant currency tailwind.

“Currency is a major tailwind, with the potential for special dividends now the balance sheet is near the £50m net cash mark,” it said.

The Canadian bank said that given macro uncertainty, temp markets are more robust than perms and Hays' mix of geographies and maturities helps provide some resilience.

RBC highlighted the fact the group is now net cash and said it sees significant potential for special dividends going forward.

“With year-end net cash at £37m, this provides options and with a clear strategy to return any excess to shareholders (over £50m net cash), Hays can effectively return all its free cash flow yield to investors going forward, meaning an effective all-in yield averaging 6% per annum for the next few years.”