Shares in human resources management software group Dayforce (DAY) eked higher today after its proposed $12.3 billion acquisition by private equity giant Thoma Bravo was applauded by analysts.
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Earlier this week Dayforce said it had reached a definitive agreement with Thoma Bravo to help it accelerate its growth and AI leadership in its sector.
Good Outcome
Under the agreement, Dayforce stockholders will receive $70 per share in cash, a 32% premium over the unaffected share price. The transaction is expected to close in early 2026.
Analysts at KeyBanc Capital Markets said that the agreement was a “good outcome” for shareholders, as it should enable the company to manage its current market and demand issues privately, away from the public eye.
Indeed, Dayforce, which provides AI-powered software for managing recruitment, payrolls and employee career development, has struggled against its peers since the end of the pandemic. Its customers include companies in the healthcare, retail and hospitality and financial services sectors.
KeyBanc said, adding that the offer translates to an implied multiple of 16.3 times projected 2026 earnings before interest, taxes, depreciation and amortization, or 5.4 times revenue, which is in line with industry peers.
Best in Class
Scott Berg, analyst at Needham, said Dayforce probably deserved a higher premium due to “revenue scale and best in class technology, but the company has struggled to attract a strong valuation in the public markets.”
Downgrading its rating from a Buy to a Hold, Berg said the deal does not include a go shop period but does include a $351 million termination fee. “As a result, we do not expect any additional offers and anticipate the deal closing,” he said.
However, he did warn the new buyers that Dayforce competes in a highly competitive and fragmented end-market with larger and better capitalized competitors.
“These competitors could exert pricing pressure for an extended period, which could compromise DAY’s profitability or win rates,” he said. “Weakening macro could reduce or delay IT spending.”
Is DAY a Good Stock to Buy Now?
On TipRanks, DAY has a Moderate Buy consensus based on 6 Buy and 8 Hold ratings. Its highest price target is $95. DAY stock’s consensus price target is $73.60, implying a 6.44% upside.
