On Tuesday, Morgan Stanley began coverage on Pagegroup Plc. (PAGE:LN) (OTC: MPGPY), assigning an Equalweight rating to the stock. The firm set a price target of GBP 4.50 for the company. The rating reflects the analyst's view that despite potential risks associated with Pagegroup's exposure to the weaker EMEA region and its focus on more cyclical permanent recruitment activity, these factors have already been accounted for in the consensus estimates.
Morgan Stanley noted that Pagegroup could potentially return approximately 35% of its market capitalization to shareholders over the next four years. This return projection is based on the company's current financial position and market performance. The firm believes that Pagegroup, with its strong presence in the white-collar, higher salary permanent recruitment sector, is better shielded against competitive pressures than its peers.
The valuation of Pagegroup was also a point of discussion, with the stock trading at 13.4 times its forecasted FY24 EBITA. This is slightly higher than the historical average of 13 times. The analyst's commentary suggests that while there are risks present, the current stock valuation has taken these into consideration, and the company's market position may offer some resilience.
Pagegroup's operational strategy and market standing appear to be key factors in Morgan Stanley's assessment.
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