PageGroup Shares Continue to Slide After Downgrade

PageGroup shares (LON: PAGE) fell 0.9% in Monday's session after the stock was downgraded to Neutral from Outperform by analysts at Exane BNP Paribas.

The bank, which maintained a price target of 370p per share on the stock, lowered the rating for the FTSE 250 company as part of its adjustment for its 2025 business services sector outlook.

While the bank raised the bureaus and distributors to the top of its sector preference list, highlighting the potential for accelerating growth, rising margins, and the recycling of excess cash into acquisitions and capital returns, it said it sees additional earnings risk and structural headwinds for the staffing agencies.

Elsewhere, Exane BNP stayed cautious about the equipment rental sector, pointing to overcapacity and low growth. The outlook on the recruitment sector has shifted markedly in recent weeks, as earnings and forecasts have come in light in the UK. Earlier in the year, upgrades were coming thick and fast, but now we have a different story emerging.

Exane BNP Paribas upgraded PageGroup to Outperform in November, with a 560p price target. The upgrade was also part of a broader note on the sector at the time, with Exane BNP analysts saying they expected the staffing sector's growth to improve and for the earnings downgrade cycle to turn positive.

In June, PageGroup was started with a Buy rating and 600p price target at Deutsche Bank, which said the company has a robust platform for an earnings recovery as the global recruitment markets recover.

PageGroup shares have struggled so far this year, falling 26%. It is down almost 6% in the last three months, hovering around levels last seen in November 2020.