Analysts upgrade staffing firms on hiring trends

Shares rise as analysts upgrade Heidrick & Struggles, Korn Ferry on improving trends

• On 12:00 pm EDT, Monday October 5, 2009

HARTFORD, Conn. (AP) -- Shares of Heidrick & Struggles Inc. and Korn Ferry International rose Monday as two analysts upgraded the staffing companies on improved trends in hiring, revenue and the economy.

Analysts Tobey Sommer and Frank Atkins of SunTrust Robinson Humphrey upgraded the two companies to "Buy" from "Neutral."

In client notes, they said they found a "pronounced improvement" in a SunTrust Robinson Humphrey poll of executive search firms, with half of respondents saying they believe staffing turned up in September.

In addition, Sommer and Atkins said firms expect revenue to rise in the next year from negative 0.6 percent in August to a 2.6 increase in September, which he said is the highest expected growth since September 2008.

Private executive search firms also are optimistic about business conditions in September and the outlook for the next 60 days, with 75 percent indicating that October and November should improve, Atkins said.

"Our view is that a resumption in executive turnover rekindles growth exiting a recession, which is spurred further by global economic growth in the second half of an expansion," Atkins said.

Sommer said job cuts moderated at financial firms, Heidrick & Struggles' largest segment, from 40,000 in December 2008 to 2,300 in August and down to 700 last month.

In midday trading, shares at Heidrick & Struggles rose 88 cents, or 4 percent, to $22.76. Korn Ferry increased 40 cents, or 2.9 percent, to $14.32.

Buzz up!