JPMorgan cuts Robert Half stock target to $47 from $65

Published 24/04/2025, 11:08
JPMorgan cuts Robert Half stock target to $47 from $65

On Wednesday, JPMorgan analysts adjusted their outlook on Robert Half (NYSE:RHI) stock, lowering the price target to $47.00 from the previous $65.00, while maintaining a Neutral rating. According to InvestingPro analysis, the stock appears undervalued at current levels, trading near its 52-week low of $44.30, having declined over 33% year-to-date. The revision follows Robert Half’s first-quarter earnings report, which revealed earnings per share (EPS) of $0.17, falling short of the company’s projected range of $0.31 to $0.41. After accounting for one-time restructuring expenses totaling $0.13, the adjusted EPS stands at $0.30.

Robert Half’s revenue also declined, showing a 6% year-over-year decrease on a constant currency, same day basis (cc SDB), which was double the guided midpoint for a 3% contraction. The shortfall in revenue was primarily due to weaker performances in contract staffing and Protiviti revenues, attributed to economic uncertainty and a decrease in client hiring activity. Permanent placement revenue, however, met expectations.

The company’s operating margins were negatively impacted across all three business segments, exacerbated by one-time costs related to strategic cost-reduction actions taken within the quarter. However, the company maintains a strong financial position, with InvestingPro analysis showing more cash than debt on its balance sheet and liquid assets exceeding short-term obligations. Looking ahead to the second quarter of 2025, Robert Half anticipates a further revenue decline of approximately 7% year-over-year cc SDB at the midpoint, which is more pessimistic than the 1% year-over-year growth previously modeled by JPMorgan.

Despite expected sequential margin improvements for the second quarter, concerns remain regarding the performance of the temporary help industry in a potential recession. JPMorgan highlighted that industry dynamics over the past two years, characterized by declining revenues despite real GDP growth, combined with the unique economic conditions of the current cycle, present unprecedented challenges in forecasting the industry’s trajectory.

In other recent news, Robert Half International Inc. reported disappointing financial results for the first quarter of 2025, with both earnings per share (EPS) and revenue missing analyst expectations. The company’s EPS was $0.17, significantly below the forecast of $0.36, while revenue was $1.35 billion, falling short of the expected $1.41 billion. In response to these results, Robert Half has implemented cost reduction measures, aiming for annual savings of $80 million. Additionally, the company provided revenue guidance for the second quarter of 2025, projecting between $1.31 billion and $1.41 billion, with an EPS range of $0.36 to $0.46. Protiviti, a division of Robert Half, acquired a consulting firm in France to strengthen its European presence. Furthermore, the company continues to invest in technology, with a focus on artificial intelligence to enhance recruitment processes. Despite the challenging economic environment, Robert Half remains optimistic about future growth opportunities, particularly in Europe.

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