Recruiter SThree PLC (LSE:STEM) is finding life harder on the Continent than across the Atlantic. Deutsche Bank has cut its target price on the shares from 360p to 290p, though it still recommends buying at the current 141p.
The latest trading update showed net fees down 12% on a like-for-like basis to about £82 million.
That marks a slight improvement from the 15% fall in the first quarter, but the picture is still patchy. Permanent hiring fees slipped 5%, while the bigger business in temporary and contract placements fell 13%.
Europe is the drag. Fees in the Netherlands were down 31% in the third quarter, having already dropped 24% in the second.
The German-speaking region, Germany, Austria and Switzerland, was off 21%. By contrast, the United States delivered a 17% increase in fees, helped by strong demand from the energy sector.
SThree’s order book of contractor work stands at £156 million, 6% lower than a year ago. Even so, Deutsche Bank notes that about 90% of expected fees for the next financial year are already covered.
Investors must weigh that reassuring pipeline against the continuing weakness in Europe. For now, the bank’s message is to keep the faith, but with more modest hopes than before.