Usually, an earnings beat is enough to send a stock up. That’s not always the case, and payroll services company Paychex (NASDAQ:PAYX) serves as an excellent example. Just why Paychex won and still lost might be a surprise. Paychex’s earnings turned in a win, coming in at $0.99 per share and beating analyst projections of $0.95 per share. However, the company missed on its revenue figures, coming in at $1.17 billion against projections looking for $1.27 billion.
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$1.17 billion was enough, though, to keep the company 7.3% ahead of where it was at the same time in 2021. The company even offered an optimistic outlook on its Fiscal Year 2023 figures. Revenue is expected to grow around 8%, where previous projections called for 7% to 8%, and consensus figures looked for 7.81% growth.
So why the drop? Eugene Simuni with Moffett Nathanson figures he has the idea: a decline in two key market sectors for Paychex. Specifically, Paychex saw weakness in the Insurance Services and Professional Employer Organization sectors. Simuni looks for these to produce much of the company’s growth. Weakness there now means a greater likelihood that the company will miss its projections.
Overall, Wall Street analysts have a consensus price target of $128.8 on PAYX stock, implying 15.04% upside potential, as indicated by the graphic above.