UBS downgrades PageGroup to “neutral,” slashes PT on prolonged hiring slump

Published 20/06/2025, 10:38
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Investing.com -- UBS Global Research downgraded PageGroup (LON:PAGE) to “neutral” from “buy” and lowered its 12-month price target to 250p from 400p, citing a prolonged downturn in permanent hiring and deteriorating earnings momentum. 

The decision follows a sector-wide reassessment after a profit warning from peer Hays (LON:HAYS) and updated macroeconomic data.

Hiring activity has declined for over two years, and UBS now expects the weakness to continue through 2026. 

Gross profit is forecast to drop 10.4% year-over-year in 2025 to £755 million, followed by a marginal 1.2% decline in 2026 and a modest 5.4% rebound in 2027. 

Adjusted EBITA is projected to fall to £23.5 million in 2025, down 65.8% from prior estimates, with margins contracting to 3.1%, near historic lows.

Earnings per share forecasts were cut sharply. UBS now expects diluted EPS of 4.38p in 2025, down from a prior estimate of 14.11p. 

Projections for 2026 and 2027 were reduced to 10.18p and 15.78p, representing declines of 53% and 41% from earlier forecasts. Net earnings are estimated at £14 million for 2025, recovering to £32 million in 2026.

Dividend expectations have also been revised. The 2025 dividend is projected at 11.42p, a 33% decrease from 2024. 

Despite lower profitability, PageGroup maintains a strong net cash balance and remains cash generative, enabling some dividend continuity. The dividend yield is forecast at 4.8% for 2025.

Valuation multiples were adjusted downward. UBS now applies a 1.20x forward EV/gross profit multiple, down from 1.50x, reflecting sub-10% margin expectations and sustained negative momentum. The stock currently trades around 1.1x EV/GP, the low end of its through-cycle range. UBS’s base case implies limited re-rating potential in the near term.

UBS analysts noted that while the long-term earnings potential remains intact, especially if recruiter productivity and hiring volumes recover, no near-term path to that recovery is visible. 

Productivity is down 27% compared to 2019 levels, and volumes remain 23% below pre-pandemic benchmarks. If full recovery materializes, EBITA could reach £289 million, more than 12 times the 2025 forecast.

Scenarios outlined in the report reflect a wide potential range. The downside case implies a share price of 145p, or 40% below current levels.

The upside case, dependent on margin and volume recovery, sees potential for 420p, about 75% above the current share price of 239p (as of June 19).

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