Citi Research has moved four leading European staffing firms to a "neutral" rating while lowering their price targets, citing a constellation of sector-specific headwinds that include a weak labour-market rebound, shrinking temporary worker penetration and compressing gross margins, alongside the risk posed by technology entrants.
In its April 30 note, Citi set new targets of CHF18 for Adecco, €25 for Randstad, 33p for Hays and 130p for PageGroup. Those targets were reduced from CHF21, €41, 62p and £3 respectively. The broker summed up its stance by saying, "Adecco, Randstad, Hays and Page seem cheap relative to history." It added a cautionary addendum: "We expect staffing share prices to squeeze when the war ends, but then the AI negative narrative could come back, potentially weighing on pricing / gross margin expectations."
Labour-market dynamics form the cornerstone of Citi's view. The brokerage noted the recovery in this cycle is tracking materially weaker than prior cycles, with the US experience showing temporary-worker penetration on a sustained downward path. That trend, Citi argues, points to employers managing head counts with less flexible labour and reduces the odds of a strong sector-wide re-rating even if macro conditions improve.
"The current cycle has been much more muted than before, with only shallow, glacial recovery," Citi wrote, underscoring its expectation that any rebound in staffing equities will likely be limited.
Gross margin erosion compounds the revenue-side pressures. Citi highlighted reported and estimated declines in gross margins across the peer set between 2022 and 2025: Adecco's gross margin fell from 21% in 2022 to 19.2% in 2025; Randstad's margin dropped from 20.9% to 18.7% over the same interval; and Hays declined from 18% in 2022 to 15% in 2025. These contractions are central to Citi's cautious earnings and valuation outlooks.
On earnings forecasts, Citi Research put Adecco's adjusted earnings per share at €2.51 for the current fiscal year, rising to €2.92 the following year. Randstad is forecast at €2.74 and €3.03. Hays is forecast at 1.1p for fiscal year 2026, a reduction from a prior estimate of 1.7p after Citi excluded a non-recurring item of £8.8 million - a change that did not affect the firm's EBITA or PBTA assumptions. PageGroup's forecast is 4.7p, rising to 7.8p.
Methodologically, Citi said it has moved away from placing primary weight on near-term earnings multiples and is instead prioritising franchise valuations. This approach incorporates estimates of normalised sales, sustainable gross margins and long-term, market-relative multiples. Under that framework the broker outlined franchise valuation ranges: CHF15-19 for Adecco; €21-25 for Randstad; 13p-33p for Hays; and £0.40-£1.30 for PageGroup.
Technology risk is an additional element restraining Citi's stance. The note identified several recent and prospective digital platforms that could exert competitive pressure: Revolut's GlobalHire platform, launched in April 2026; Jack & Jill, a London-founded startup from 2025; and OpenAI's Jobs platform, expected mid-2026. While Citi stated it does not expect tech-enabled startups to fully replace recruiters, it warned these entrants could increase competition or create marketplace disruption, "potentially weighing on pricing / gross margin expectations."
Summary takeaways from Citi's update include lower target prices and neutral ratings for the four staffing firms; a view that the current labour-market recovery is weaker and more protracted than in past cycles; documented gross margin declines across the group; a shift to franchise-based valuation; and an elevated focus on technology disruption as a moderating force on future pricing and margins.