Deutsche Bank Starts Resources Connect (RECN) at Sell
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Deutsche Bank initiates coverage on Resources Connect (NASDAQ: RECN) with a Sell rating and a price target of $13.00. Analyst Kevin McVeigh said "cycle underperformance isn’t enough."
"While we like this business model in the longer term, we believe the Street has to become more comfortable with estimates as they come down and management communicates, before we become more positive and a lot of the discount for volatility comes out of the stock. Resources Global Professionals is a professional services firm with a variable pay model, making it a hybrid between a professional services and staffing firm. The company's typical associate has 20 years of experience — yielding a level of skill and input that is compelling — but Resources doesn’t take on utilization or project risk, nor deliver any financial or audit opinions. Average associate bill rate of approximately $125 per hour is much higher than a professional staffing firm, but lower than the $200 to $500 bill rates of Big 4 audit firm or financial or legal consulting firm, partially due to the lack of utilization risk and need for insurance," said the analyst.
Shares of Resources Connect closed at $15.32 yesterday.
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