Bell Potter downgrades APM on weak trading outlook
Make us a preferred source
Make us a preferred source on Google
The news: Bell Potter analysts have downgraded their rating on APM Human Services as weaker trading conditions dampened the employment services provider's earnings outlook.
The numbers: The analysts lowered their recommendation on APM from 'buy' to 'hold', but lifted their target price on the stock from $1.40 to $1.45.
Shares were down 0.2% to $1.38 by 10:45am AEST.
APM shares soared earlier this month after the company recommended an improved takeover bid of $1.45 per share from US private equity firm Madison Dearborn Partners (MDP), valuing APM at $1.3 billion.
However, the analysts lowered their earnings estimates for APM based on a weaker trading outlook, reducing their EBITDA forecast by 2.3% for FY24, 22.6% for FY25 and 25.3% for FY26.
The context: Bell Potter analysts said that with weak trading and no higher offer on the table, APM's shareholders should accept MDP's offer.
They noted that APM's trading continues to be weak with low client flows into employment services in its Australia and UK operations, and expectations that this will continue into FY25.
The source: Bell Potter research
