Analyst sees staffing markets stabilizing

Analyst: Staffing markets stabilizing with growth unclear after recession

• On 11:32 am EDT, Thursday October 1, 2009

HARTFORD, Conn. (AP) -- Shares of Manpower Inc. fell Thursday as an analyst downgraded the staffing company, saying its growth prospects are unclear.

Citi Investment Research Analyst Ashwin Shirvaikar downgraded the Milwaukee company to "Hold" from "Buy" and raised his price target to $61 from $50.

"Stabilization across its markets seems to continue, but visibility toward eventual growth remains very limited," he said in a client note late Wednesday. "We believe some time on the sidelines may allow for the earnings to catch up to the stock and/or provide greater certainty and clarity toward the eventual recovery."

Manpower's shares have risen about 140 percent since its low point March 9.

Shirvaikar upgraded Kelly Services Inc. to "Hold" from "Sell," saying he is more confident that the Troy, Mich., staffing company is seeking additional cost reductions.

"Previously, we were concerned about KELYA's large losses and the unclear stance on further cost actions," Shirvaikar said, referring to Kelly by its stock symbol. "We now see a clearer path to profitability and have adjusted our estimates accordingly."

He cut his loss estimate for 2010 to 44 cents per share from a loss of 49 cents per share and raised his price target to $14 from $9.

Analysts surveyed by Thomson Reuters expect, on average, a loss of 23 cents per share.

Shirvaikar raised his price target for Robert Half International Inc. to $28 from $24. He maintained his "Hold" rating.

The Menlo Park, Calif., company "should enjoy very strong incremental margins coming out of a recovery," he said.

Based on discussions with industry representatives, Shirvaikar said stabilization in the staffing sector is continuing.

"However, nobody was willing to equate the lower declines into expected growth," he said. "Companies are remaining hesitant about any hiring plans and will likely lean on existing staff before going out and hiring" temporary or permanent staff.

Shares of Manpower fell $2.78, or nearly 5 percent, to $53.91 in morning trading. Kelly Services lost 7 cents to $12.23.

Shares of Robert Half Inc. fell 75 cents, or 3 percent, to $24.27.

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