Adecco upgraded as Bernstein sees 42% upside on Akkodis turnaround, cost cuts

Investing.com -- Adecco has been upgraded to “outperform” from “market-perform” by Bernstein, which said the staffing company’s risk-reward profile has improved even as its stock has fallen nearly 25% in the past month, in a note dated Monday. 

Shares of the Swiss–French company were up 1.9% at 05:18 ET (09:18 GMT).

The analysts kept the price target unchanged at 27.50 CHF, implying a 42% upside from the 19 September closing price of €20.70.

Bernstein pointed to better earnings prospects, particularly in Adecco’s technology unit Akkodis. 

“The group has taken decisive action cutting consultant headcount, working on G&A savings and lining up further savings in real estate,” the analysts said.

In Germany, where margins had been dragged down by automotive exposure, the restructuring plan worth more than €40 million included exiting about 400 consultants. 

Bernstein expects the Q2 margin of 1.6% to progress to a run-rate of around 6%. A move toward management’s medium-term 10% margin ambition would imply a 20% uplift to group EBITA.

The upgrades to earnings estimates reflect these operational changes. Bernstein lifted EBITA forecasts by 2% in fiscal year 2025 and 5% in 2026–27. 

EBITA is now projected at €669 million for 2025, up from €657 million, rising to €793 million in 2026 and €900 million in 2027. 

Earnings per share have also been revised higher, with 2025 EPS set at €2.24 from €2.19, 2026 EPS at €2.76 from €2.63 and 2027 EPS at €3.19 from €3.06. The dividend per share is expected to remain at €1.00 in 2025, increasing to €1.10 in 2026.

Revenues are forecast at €22.97 billion in 2025, flat year on year, and €23.72 billion in 2026, while gross margin is seen improving from 19.2% in 2025 to 20% in 2027. 

Bernstein estimates EBITA margins will climb from 2.9% in 2025 to 3.6% by 2027. 

“We increase EBITA estimates 2–5%,” the analysts said, adding that adjustments to Akkodis drive most of the revisions.

The brokerage noted that while headline labor market data remains soft, the uncertainty in permanent hiring “should help temps markets and reverse two-plus years of underperformance.” 

In the U.S., year-on-year declines in temporary staffing are easing, while in France Adecco has gained share in the SME segment despite weaker large-client demand. Job posting data also indicates labor market stabilization in Germany.

Adecco will host its Capital Markets Day in London on 26 November, where the focus will shift from cost-cutting to growth, digitization, automation and the Akkodis turnaround. 

At the last CMD in 2023, the company had already delivered €174 million in savings, exceeding its €150 million target. 

Bernstein said November’s event is expected to “major on growth, digitisation and automation,” setting the stage for Adecco’s next strategic phase.

Despite the upgrade, risks remain. A sharper downturn in temporary staffing markets or renewed deterioration in Akkodis could undermine the estimates. 

Still, Bernstein added, “While headline labour market data is softening, that uncertainty should be supportive for temp volumes, with the US leading the way.”