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Investing.com - Morgan Stanley (NYSE:MS) downgraded Hays (LON:HAYS) Plc. (LON:HAS) from Equalweight to Underweight on Wednesday, while lowering its price target to GBP0.55 from GBP0.64.
The investment bank cited deteriorating job flow data in June across Germany and the United Kingdom (TADAWUL:4280), which together represent approximately 50% of Hays’ group net fees. Morgan Stanley expressed concern that this weakness could continue to impact the company through the first and second quarters of 2026.
The downgrade reflects Morgan Stanley’s expectation that Hays will see net fees decline by approximately 3% in fiscal year 2026. While the bank’s net fee projections align with broader market consensus, it forecasts approximately 10% lower operating profit over the next two years compared to consensus estimates.
Morgan Stanley specifically noted that market consensus currently expects Hays to deliver £12 million more in operating profit in FY26 despite generating £20 million less in net fees. The bank considers this outlook "too ambitious" despite acknowledging Hays’ efforts to reduce its cost base.
The research firm projects £46.5 million as a more reasonable operating profit forecast and warned that the negative earnings momentum for Hays might not be over yet, unlike some other staffing companies in its coverage.
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