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Spring cut but retains Buy status

Collins Stewart has cut its estimates and target price for Spring Group. The broker says it has reduced its target to 55 pence from 63 after cutting its EBITA forecasts for Spring Group to 8.0 million from 10.6 million for full year 2008, to 9.0 million from 11.9 million for 2009, and to 10.0 million from 13.3 million for 2010. Collins Stewart says its revised forecasts for Spring Group is consistent with what it has done to its estimates for mid cap peers Hays and Michael Page. The broker says that modest profits growth is possible in 2009 as Spring Group has added recruitment consultant headcount and opened around 18 branches during 2008 which are not yet profitable but should make a contribution in 2009. Collins Stewart says while it expects little progress from Spring Group shares in the short-term, it believes that the shares are undervalued. It retains its 'buy' recommendation on the stock.


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