Robert Half International Inc (NYSE:RHI) has no debt, a 28% return on invested capital (2023 estimates), and a 2.8% dividend yield, which are attractive traits ahead of a strong cyclical stock recovery, say UBS analysts.
They initiated coverage of the staffing and business consulting company’s stock on Wednesday with a ‘Buy’ rating and a 12-month target price of $82 per share.
The analysts assert that Robert Half stock typically troughs about 12 months ahead of earnings trough, and has a powerful recovery off the stock bottom.
“Post stock trough in the past 3 recessions, Robert Half shares have increased on average +38% over 3 months and +73% over 12 months,” they wrote.
The analysts believe Robert Half shares are pricing in a mild recession, with the anticipated 2023/2024 recession most closely resembling the 1991/1992 recession in terms of peak-to-trough payrolls declines (-1%), but would be milder than the 2001 (-2%) and 2008 (-6%) recessions, based on UBS economists’ forecasts.
“Based on this outlook, we project peak-to-trough revenue decline of -15% for Robert Half this cycle, similar to -16% in 1991/1992 but milder than 2001/2008 recessions,” the UBS analysts added.
Shares of Robert Half International have shed about 23% over the past 52 weeks to its current price of $68.86.
Contact Sean at sean@proactiveinvestors.com