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Hays weak as Morgan Stanley cuts its rating to ‘equal-weight’ from ‘overweight’ on lack of near-term catalysts

Morgan Stanley’s analysts noted that with its half-year results in February, Hays flagged a lower level of contractor extensions in its biggest market, Germany
Hays sign
The US investment bank also chopped its target price for the FTSE 250-listed firm down to 185p from 200p

Morgan Stanley gave a knock to Hays PLC (LON:HAS) on Tuesday, downgrading its rating for the staffing group to ‘equal-weight’ from ‘overweight’ ahead of a third-quarter trading update next week, pointing to a lack of near-term catalysts.

The US investment bank also chopped its target price for the FTSE 250-listed firm down to 185p from 200p, with the shares currently trading at 149.90p, off 1.8% from Monday’s close.

READ: Hays shares hit by fears of German slowdown despite first-half profit growth

In a note to clients, Morgan Stanley’s analysts noted that with its half-year results in February, Hays flagged a lower level of contractor extensions in its biggest market Germany, which will modestly reduce their overall growth rate.

They pointed out that, in their view, with slowing growth in Germany and in Australia – which together account for around 65% of the company’s operating profit – the stock will struggle to outperform near-term.

The analysts said they would need to see an inflection in growth momentum or higher visibility in at least one of those markets before taking a more positive view on the business again.

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