Management at PeopleIN's recent AGM noted a more challenging operating environment, which is expected to impact earnings throughout FY24, but felt the wider downturn will be relatively short-lived, especially in the health industry.

Morgans was surprised by the level of margin degradation, and lowers its FY24 underlying earnings (EBITDA) forecast to $38.5m from $48.8m, having only just downgraded earnings expectations by circa -23% in October.

The broker's FY24 earnings margin is now at around 3.4%, which is below the 4.8% achieved in H2 of FY23, and well adrift of the 7% margin target set by management.

The target price falls to $1.85 from $2.40, while the Add rating is unchanged

Sector: Commercial & Professional Services.

Target price is $1.85.Current Price is $1.26. Difference: $0.59 - (brackets indicate current price is over target). If PPE meets the Morgans target it will return approximately 32% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2023 Acquisdata Pty Ltd., source FN Arena