RBC Capital Markets has raised its price target for Hays PLC (LSE:HAS), the recruitment company, to 85p from 60p, keeping its 'outperform' rating in place.
The upgrade reflects growing confidence in the group's "Momentum" strategy, unveiled by recently appointed chief executive Mark Dearnley alongside full-year results.
RBC made only minor changes to underlying earnings forecasts, trimming adjusted earnings per share estimates by 3% for the 2027 financial year and 2% for 2028.
The bank made larger changes to reported profit forecasts, now expecting £55 million in exceptional charges for the 2027 financial year, down from £90 million in 2026.
Hays has set targets of more than £1 billion in net fees and a conversion ratio, a measure of profitability common among staffing companies, above 25%.
RBC does not assume the conversion ratio will exceed 20% in near term forecasts but raised its assumed long-term margin to 18% from 16%, citing increased confidence in the strategy.
The bank also lowered its assumed cost of capital to 9.5% from 10%, reflecting reduced execution risk as Hays enters the final stage of its restructuring.
RBC's upside scenario puts the shares at 120p, while its downside scenario suggests they could fall to 35p if earnings weaken further.
The recruitment company has been contending with what RBC described as the most prolonged staffing industry downturn in recent memory.
RBC said cyclical pressures had been compounded by structural shifts in the sector, and expressed scepticism about how quickly artificial intelligence would affect employment markets.
