SThree Shares (STEM) Drop Lowest Level In Years – H1 Profit Down 72%

SThree shares (LON:STEM) have fallen to their lowest levels in years, reflecting mounting concerns about the company's financial performance and near-term outlook, with the latest H1 update doing little to slow downward momentum.

The company, a specialist recruitment firm focusing on science, technology, engineering, and mathematics (STEM) sectors has seen it's share price drop 10.8% in the past week, hitting a new low at 217p today on the day as the bearish trend continues unabated.

The recent downturn is the culmination of a challenging year for SThree. Since the beginning of 2025, SThree has shed a quarter of it's market cap, with the decline over the past 12 months even sharper still, at 47%.

Whilst STEM has been trending down since late 2021, the latest pullback began with a profit warning issued in December 2024 which triggered a 36% decline. SThree projected a substantial decrease in pre-tax profits for the fiscal year ending November 30, 2025, anticipating profits of approximately £25 million, a significant shortfall compared to analyst expectations of £66.6 million.

The recruitment industry as a whole is facing headwinds, with companies delaying hiring decisions amid increased political and macroeconomic uncertainty.

SThree's specialization in STEM sectors, while typically a strength, has made it particularly vulnerable to these cyclical downturns.

In response to the challenging environment, SThree has initiated operational adjustments, including a £20 million share buyback program aimed at returning value to shareholders.

The company also planned to implement operational efficiencies to mitigate the impact of market conditions, with anticipated one-off costs of up to £7 million in fiscal 2025.

Despite these measures, SThree expects the challenging economic conditions to persist throughout the new financial year, impacting net fees and overall profitability.

The H1 trading update showed revenue and net fees both down 14% Y/Y, with operating profit having declined 72%. Net cash also moved lower, declining from £90million in H1 24, to £47,8million in the same period this year.

With shares at the lowest level in years, sentiment is firmly bearish on the STEM, the latest outlook and guidance indicates momentum is improving in certain segments of the market (US and Japan) yet performance for the full year 25 remains in line.

Accoring to the CEO, Timo Lehne in yesterday's H1 update “The Group delivered a stable performance in the first half of the year against a persistently challenging market environment“. This was not enough to slow the bears however, with the share price falling 8.7% on the print, and dipping further today.