CCRN - Cross Country Healthcare cut to Hold at Truist citing labor market conditions

Cross Country Healthcare ( NASDAQ: CCRN ) fell ~4% pre-market Wednesday after Truist downgraded the Florida-based healthcare staffing firm to Hold from Buy citing a balanced risk profile given the labor market trajectory.

The analysts led by Tobey Sommer argue that rising unemployment could make it more convenient for hospitals to meet labor demand with affordable wages paid to full-time employees, therefore relying less on temporary labor, which could impact CCRN.

Sommer added that if labor conditions hold, with a high demand for health professionals, including temporary staff, there will only be a modest upside to the company's 2023 estimates.

However, the analyst downgrades the stock citing downside risks, including adverse impact on demand and pricing for temp nurses due to higher unemployment in the event of a recession. Yet, Truist raises the price target on CCRN to $2.97 from $2.63 to reflect the consensus.

With a Buy recommendation, the firm remains bullish on CCRN's rival AMN Healthcare Services ( AMN ), arguing that the latter is more immune to demand/pricing pressure given its focus on large existing clients instead of growth maximization.

Additionally, Truist cites the recent outperformance of CCRN shares: The stock has added ~39% over the past 30 days compared to the ~16% rise in the AMN, as indicated in this graph.

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