This post was originally published on this site
https://i-invdn-com.investing.com/news/LYNXNPEC0K08U_M.jpgIt reported Q1 EPS of $1.38, in line with the analyst estimate of $1.38, while revenue for the quarter came in at $1.13 billion, below the consensus estimate of $1.15B.
BofA analysts told investors in a note that while it is a great business, the current environment is tough.
“We had stuck with our Buy as we expected ASGN to outperform the rest of the staffing sector given favorable secular trends (ie. clients needing to invest in tech to remain competitive), outsized growth at its consulting business, and an expected return to solid growth in its Government segment,” explained the analysts.
“However, client demand for its staffing services has proved to be more discretionary than we anticipated with sales growth deteriorating significantly from an already tough start to the year. We worry results will continue to disappoint through year-end.”
They also wrote that the firm believes ASGN could miss its 2024 margin target if sales deteriorate further. ASGN reaffirmed its 12.1-12.4% 2024E EBITDA margin goal, while BofA model a 12.0% 2024 EBITDA margin.
Moreover, the analysts noted that staffing revenues fell sharply in late Q1.
“We model an 18% drop in 2Q staffing revenue, compared to 1Q/4Q’s (11)/(2)%. Sales unexpectantly deteriorated late in 1Q. It experienced particular weakness from large banking, telecom, and tech customers. High-margin Creative Circle and permanent placement sales (14.6% of total) fell double digits,” they explained.