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On Wednesday, JPMorgan analyst Sylvia Barker increased the price target for Adecco Group AG (ADEN:SW) (OTC: OTC:AHEXY) to CHF20.70, up from the previous CHF19.20. The firm maintained its Underweight rating on the stock. The adjustment followed Adecco (SIX:ADEN)’s full-year 2024 results and subsequent conference call with management. According to InvestingPro data, Adecco, with a market capitalization of $4.78 billion and a P/E ratio of 15.45, has maintained a FAIR financial health score despite market challenges.
During the call, management outlined their updated dividend policy, which is anticipated to release approximately €250 million in cash, primarily aimed at further reducing the company’s debt, which remains a top priority. InvestingPro analysis reveals that Adecco maintains a significant 6.56% dividend yield and has consistently paid dividends for 29 consecutive years, despite carrying a debt-to-equity ratio of 1.11. Additionally, there were discussions about modest improvements in staffing trends, with the United States showing an uptick in temporary staffing volumes, while markets such as France and Germany continue to face challenges.
Adecco’s management also provided insights into the potential growth and margin trajectory, aiming to reduce leverage to equal or less than 1.5 times by the end of 2027. Despite these developments, JPMorgan revised its forecast for Adecco’s FY25 EBITA downwards by 1%, expecting consensus estimates to see a larger decrease.
Furthermore, the firm reduced its FY25 and FY26 dividend per share (DPS) estimates by 10% and 25%, setting them at CHF 1.1 and CHF 1.3, respectively. While acknowledging Adecco’s fourth-quarter results, which were better than feared and led to a 10% increase in share price at the time of publication, JPMorgan expressed caution about the market recovery and anticipates continued pressure on earnings in the near term.
In the staffing sector, JPMorgan showed a preference for Randstad (AS:RAND) over Adecco, citing easier comparisons in 2025, higher U.S. exposure with a better market position, and more potential for excess capital returns as reasons for their favorability. For deeper insights into Adecco’s competitive position and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.
In other recent news, Adecco Group AG reported a 5% decline in revenue year-over-year for Q4 2024, amounting to EUR 5.9 billion. The company attributed this downturn to challenging market conditions, particularly in France, America, and Northern Europe. In response to these challenges, Adecco has updated its dividend policy to aim for a payout ratio between 40%-50%, a move intended to expedite debt reduction. CFRA analyst Lee Zhao Jun downgraded Adecco’s stock from Hold to Sell, citing concerns over the company’s deleveraging progress and potential further declines in revenue growth. Bernstein also revised Adecco’s price target downward to CHF25.30, maintaining a Market Perform rating, while noting the ongoing challenges in the European market. Jefferies analysts lowered their rating on Adecco to Underperform, reducing the price target to CHF19.50, due to concerns about the company’s leverage ratio and potential dividend risks. These developments reflect a cautious outlook among analysts, with particular attention to Adecco’s financial health and market performance.
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