Wednesday 25 November 2009 7:00 pm

Harvey Nash shares fall as firm cites challenges

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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.

Panmure Gordon said the update was “significantly worse than expected, and should send a reality check to those expecting cyclical recovery from recruitment markets”.

The broker cuts its pre-tax profit forecasts for both 2010 and 2011 to £4m from £6.9m, and reduced its target price to 39p from 49p, while keeping its “hold” rating.

“We expect recruitment share prices elsewhere to wake up and smell the coffee as a result,” it said.

Meanwhile, Numis downgraded its recommendation to “add” from “buy” and slashed its 2010 pre-tax profit forecast by 47 per cent to £4m and by 28 per cent to £4.9m for 2011.

Yesterday shares fell by nearly 18 per cent to 36.50p.