Rising tides are supposed to lift all boats, but this isn’t always the case. Sometimes investors miss potential value opportunities. Just look at the UK recruiters which, despite the FTSE100 recently hitting all-time highs, have significantly lagged the broader index. Sure, there are presently a few concerns weighing on sentiment, not least more cautious client hiring intentions, however we think this level of pessimism is overdone – especially considering the sector’s favourable risk/reward profile, along with the jobs market now showing early signs of stabilisation after last year’s shock BREXIT vote.
Take specialist engineering and technology staffer, Gattaca. Today, in a pre-close trading update it reported robust 1 st half figures that are in line with FY17 expectations, together with sealing a chunky earnings enhancing acquisition. Indeed, as a consequence of the deal we have nudged up our adjusted PBTA targets for this year and next, by £0.8m (or 4.2% to £19.6m) and £1.9m (9.6% to £21.9m) respectively – thus increasing the overall valuation to 475p/share (+6.2% vs 450p before).
In terms of specifics, H1 NFI declined modestly by -2% to £35.1m (£35.9m LY), with the UK falling -4%, partly offset by International (+2%) thanks to sterling weakness. Encouragingly too, the figures improved sequentially (-3% Q1 vs -1% Q2), and were generally better in the UK than achieved by several of its rivals (see below).