Robert Half International Downgraded to Sell, Despite Strong Q4 Beat
Robert Half International Inc. (NYSE:RHI) was downgraded to sell from buy at DA Davidson with a price target of $120 down from $125, despite the company’s strong Q4 results.
Analysts at DA Davidson said the margins may suffer as wages start to rise and unemployment rates reach full employment. However, they admitted that they might be early in making this call. The analysts believe we are at or near that point in the recovery, and they are not confident that remote work can extend this cyclical labor dynamic much longer.
The company’s Q4 results came in significantly better than the Street estimates. Quarterly revenue grew 36% to $1.7 billion and adjusted EPS was up 81% to $1.51, as strong demand for temporary staffing and permanent placement, combined with remote work, is boosting growth and margins to record levels.
The company expects Q1/22 revenue to range from $1.75 billion to $1.83 billion and EPS to range from $1.39 to $1.49, compared to the consensus estimates of $1.68 billion and $1.31, respectively.
| Symbol | Price | %chg |
|---|---|---|
| 6098.T | 10865 | -0.09 |
| VTNY.JK | 186 | -2.15 |
| 2181.T | 229.1 | -0.13 |
| SOSS.JK | 560 | 0 |
Robert Half Upgraded to Buy Amid Optimism for Business-Friendly Policies
Robert Half International (NYSE:RHI) received an upgrade from Truist Securities analysts, moving from Hold to Buy with a raised price target of $90, up from $62. The upgrade reflected growing optimism about favorable economic and business conditions that could benefit the staffing firm.
The analysts highlighted several key factors driving the improved outlook. The potential for a pro-business environment under a second Trump administration, characterized by lower taxes, reduced regulation, and smaller government, was expected to bolster small- and medium-sized business (SMB) sentiment. This could lead to increased hiring and overall optimism in the sector, similar to trends observed during Trump’s first term.
Additionally, further interest rate cuts, moderating inflation, and a potential surge in mergers and acquisitions were seen as tailwinds for Robert Half. The company’s Protiviti consulting arm was particularly well-positioned to capitalize on an uptick in M&A activity, adding to its growth potential.
The analysts also noted that Robert Half shares appeared to have stabilized, with poor sell-side sentiment presenting a contrarian opportunity for investors. Concerns about artificial intelligence disrupting the staffing industry were described as overstated, further supporting the upgrade.
With these favorable conditions aligning, Robert Half is poised to benefit from an improving economic landscape, making it an attractive option for investors seeking exposure to the staffing and consulting sector.
RHI Reported Q3 Beat
Robert Half International Inc. (NYSE:RHI) provided its Q3 results, with the flexibility of remote work and labor shortages continuing to benefit the company’s growth and profitability. Quarterly revenue came in at $1.7 billion and Non-GAAP EPS at $1.53, which both beat the consensus estimates.
The company’s small and midsize business (SMB) customers are embracing remote work and using it to actively recruit talent outside their local area to find key skills and/or cheaper labor options. The company experiences a modest 5-10% decline in the public-related business in Q4 sequentially due to slowing government assistance programs for COVID-19 unemployment. Private sector demand remains strong due to labor shortages and numerous customer investment initiatives.
