Berenberg stays upbeat on SThree despite profit warning

(Sharecast News) - Berenberg has slashed its target price for SThree by a quarter after a profit warning from the STEM-focused recruitment group on Thursday, but said it still sees long-term upside for the stock. The broker cut its target price from 520p to 390p, but reiterated a 'buy' rating on the shares.

Updating on full-year trading, the FTSE 250 firm said that while it should meet estimates with its annual results, poor market conditions were set to continue, impacting net fees in the new financial year.

The company now expects pre-tax profits for the year ending 30 November 2025 of around £25m, which implies a 62% downgrade to consensus forecasts, according to Berenberg.

"While we expect the shares to react in accordance with this sizeable downgrade, some of this is already likely priced in, and the longer-term strategy of the group, and SThree's focus on STEM contract placements remains compelling over the medium term.

"As markets stabilise, operational efficiencies and the productivity enhancements from SThree's Technology Improvement Programme (TIP) should see that it remains a long-term winner."

The stock was down nearly 24% at 275p by 0947 GMT.