Deutsche Bank Starts Manpower Inc. (MAN) at Hold
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Deutsche Bank initiated coverage on Manpower Inc. (NYSE: MAN) with a Hold rating and a price target of $77.00. Analsyt Kevin McVeigh highlighted downward estimate revisions and cycle offset valuation.
"While the MAN stock is one of our favorite longer-term ideas, we need to see more signs of global stability and downward estimate revisions — mostly due to FX — before becoming more constructive. Manpower is one of the three leaders in the global staffing industry, with what we consider to be the strongest brand. We believe Manpower can deliver double-digit EPS growth over the cycle through a combination of increased temp penetration in mature markets, opening new temporary markets, and wage inflation as Western society and Japan age in the coming decade. In addition to revenue, Manpower has margin expansion potential driven by increased permanent placement and professional staffing exposure, more exposure to SMB clients, and continued operational efficiencies. We also believe Manpower is a more geographically and service-line diversified company than the last few cycles, which should help it manage this cycle better. In a downturn, counter-cyclical Right Management [~5% of EBIT] should help offset some of the run-off in temporary and permanent earnings," said the analyst.
Shares of Manpower Inc. closed at $70.12 yesterday.
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