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William Blair upgraded Kforce to Buy from Hold after the company topped 2Q earnings estimates. Shares of the professional staffing services and solutions company soared about 23% on Tuesday.
William Blair analyst Tim Mulrooney said that Kforce (KFRC) is increasingly expanding its technological infrastructure. "As one of the industry’s largest IT staffing providers with extensive service offerings, Kforce is a natural partner to clients seeking to implement and upgrade new systems," Mulrooney wrote in a note to investors. The analyst added that "the pandemic has hastened a longer-term shift in prioritizing digital and virtual capabilities".
Truist analyst Tobey Sommer raised stock's the price target to $35 (10.1% downside potential) from $30, but maintained a Hold rating on the stock. Sommer raised his FY20 earnings estimates to $2.23 from $1.30 per share. He told investors in a research note that the company's "solid" IT staffing market supports its profitability.
On Aug. 10, Kforce reported 2Q earnings of $0.47 per share, beating Street estimates of $0.31 per share. Earnings during the quarter declined 28.8% year-over-year, due to lower operating margin. 2Q revenues increased 1.2% year-over-year to $343 million, beating analysts’ expectations of $313.80 million. The company forecasts 3Q earnings of $0.72-$0.80 per share, which above the consensus of $0.40. Kforce expects 3Q revenues of $352-362 million, compared with the consensus of $316.5 million.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 1 Buy and 3 Holds. Following this year’s gain of 18%, the average price target of $34.67 implies downside potential of about 11%. (See KFRC stock analysis on TipRanks).