Heavyweight broker Deutsche has taken the chop to staffing stocks, reckoning they will continue to fall on earnings downgrades and do worse than the market in 2017.
It moves both recruiters Hays plc (LON:HAS) and Michael Page International PLC (LON:MPI) to 'sell' from 'hold' and pushes the target on Hays down to 105p from 150p and Page to 290p from 530p.
"Staffing and recruitment companies have already de-rated and as such it is tempting to try and look through the downgrades, however, we believe it is too early to say that a downturn is “in the price” until the earnings downgrades have started to come through," said analyst Tom Sykes.
He says the broker's concerns are both cyclical and structural.
"There has been a synchronous rise in staffing and recruitment markets and with the number of job vacancies in the UK, US, Japan and Germany all above their previous peaks we see considerable risk of a substantial earnings correction in 17e," he notes.
The same broker says today’s announcement that Sky (LON:SKY) has retained the majority and best Bundesliga live games is a "major positive" and that the downside scenarios have all been averted.
It repeats a 'buy' and 1,500p target price after it emerged Sky Deutschland has paid €3.5bln to secure the rights to screen top-flight German football matches through to the 2020/21 season.
That averages €876mln a year for the rights to screen 572 live matches per season from German football’s top two divisions – the Bundesliga and Bundesliga 2.
Deutsche also looks at the UK building sector and notes that following on from robust Bellway (LON:BWY) results today, housebuilders continue to be the focus next week with first half results from Crest Nicholson on Tuesday and 2016 results from Berkeley Group on Wednesday.
It today repeats 'buys' on Taylor Wimpey PLC (LON:TW.) and Barratt Developments PLC (LON:BDEV).
Elsewhere, Numis today repeats an 'add' and 400p target price on gold miner Acacia (LON: ACA) after a recent site visit to the Bulyanhulu and North Mara gold mines in Tanzania.
There has been a clear turnaround at flagship Buly, with a reduction in headcount and change in culture, whilst North Mara is benefiting from better than expected grade and thicknesses at the Gokona underground mine as well as an improvement in community relations, the broker said.
"With both key operations entering a period of improved performance, ACA remains one of our top picks and we retain our ADD rating and maintain our 400p price target."