21st Mar 2022 09:46
(Alliance News) - SThree PLC reported sizeable first quarter growth, impressing Liberum, though the investment bank on Monday decided against lifting its "cautiously set" forecasts for the recruitment company.
Liberum said it will not lift forecasts for SThree at this "early stage" of the STEM-focused firm's financial year. The broker is mindful of "the uncertain macro environment".
STEM refers to science, technology, engineering, and mathematics professions.
SThree Chief Executive Timo Lehne on Monday said the firm is "conscious" of a potential macro-economic hit from the Russian invasion of Ukraine. However, Lehne added SThree's direct exposure is "minimal".
In the first quarter ended February 28, the London-based company's net fees climbed 24% year-on-year to GBP93.8 million from GBP75.5 million. On a constant currency basis, net fees rose 29% annually, a stark contrast to a 1% fall in the first quarter of financial 2021.
In the final quarter of financial 2021, net fees had risen 25% annually on a constant currency basis, so growth has picked up at the start of the new financial year.
SThree's order book was up 42% year-on-year at quarter end, slowing from 43% growth in the fourth quarter, though still "underpinning our confident outlook", the company said.
Analysts at Liberum commented: "We make no change to our estimates, given macro and geopolitical uncertainties. However, this leaves our forecasts very cautiously set, given current momentum and we would expect to see upgrades through the year."
Liberum forecasts SThree's net fee income to rise 9% on a reported basis over the full-year.
"After 24% reported in Q1, if we assume 15% growth in Q2 against a materially tougher comparative, the implication is broadly flat year-on-year NFI in H2, based on our current estimates," Liberum added.
It is a cautious estimate, the broker admitted, especially when factoring in SThree's 42% order book growth. The chunky order book bodes well for the second quarter.
However, amid prevailing macro economic uncertainty, Liberum is keeping its forecast unmoved for now.
That said, "the current trajectory suggests material upside to forecasts as the year progresses", Liberum explained.
The broker rates SThree at Buy with a 680.00 pence price target.
SThree shares were 0.9% higher at 416.10p each in London on Monday morning.
By Eric Cunha; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
SThree