ManpowerGroup Must Beware Of Tariff Overhang Despite EU Upside: JPMorgan
Lekha Gupta 1 year ago
EquitiesLarge CapPrice TargetTop Stories
JP Morgan analyst slashes ManpowerGroup's price forecast following Q1 results, citing higher expenses and uncertain trade tensions.
JPMorgan analyst Andrew C. Steinerman slashed the price forecast of ManpowerGroup (NYSE:MAN) following its first-quarter fiscal year 2025 results reported last week.
The company reported a sales decline of 7.1% year-on-year to $4.09 billion, beating the analyst consensus estimate of $3.96 billion, and adjusted EPS was 44 cents, missing the consensus of 50 cents.
ManpowerGroup expects second-quarter EPS of 65 cents to 75 cents, versus an estimate of 95 cents.
Steinerman cut the price forecast from $65 to $50 while retaining a Neutral rating.
The analyst notes that higher SG&A expenses contributed to the EPS miss, owing to ongoing investments in the back-office transformation efforts.
The analyst acknowledges the company’s decision to provide second-quarter guidance amid the highly uncertain environment, a step many companies might avoid.
However, concerns around tariffs go well beyond the near term, and the market’s negative response likely reflects unease over the limited visibility into potential longer-term impacts, adds the analyst.
The analyst says that management caveated their cautious outlook by highlighting potential upsides from a resolution in U.S.-European trade tensions, which could boost staffing demand.
Additionally, Manpower's view that ongoing trade disputes may drive greater economic self-sufficiency in Europe, notes the analyst.
Steinerman lowered adjusted EPS estimates for FY25 to $3.01 (from $4.03) and for FY26 to $5.33 (from $6.45).
Investors can gain exposure to the stock via WisdomTree U.S. SmallCap Quality Dividend Growth Fund (NASDAQ:DGRS).
Price Action: ManpoweGroup shares are down 0.97% at $39.72 at the last check Monday.
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