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Harvey Nash shares fall as firm cites challenges

SHARES in Harvey Nash tumbled yesterday after the British recruitment and outsourcing firm admitted trading remains challenging, while the expectation of a V-shaped recovery in its end-markets has not materialised.<br /><br />Panmure Gordon said the update was &ldquo;significantly worse than expected, and should send a reality check to those expecting cyclical recovery from recruitment markets&rdquo;.<br /><br />The broker cuts its pre-tax profit forecasts for both 2010 and 2011 to &pound;4m from &pound;6.9m, and reduced its target price to 39p from 49p, while keeping its &ldquo;hold&rdquo; rating.<br /><br />&ldquo;We expect recruitment share prices elsewhere to wake up and smell the coffee as a result,&rdquo; it said.<br /><br />Meanwhile, Numis downgraded its recommendation to &ldquo;add&rdquo; from &ldquo;buy&rdquo; and slashed its 2010 pre-tax profit forecast by 47 per cent to &pound;4m and by 28 per cent to &pound;4.9m for 2011.<br /><br />Yesterday shares fell by nearly 18 per cent to 36.50p.