Cautious Outlook on Paychex: High Valuation Amid Uncertain Macroeconomic Environment and Modest Growth Projections

Analyst Jason Kupferberg of Bank of America Securities reiterated a Sell rating on Paychex (PAYX – Research Report), boosting the price target to $135.00.

Jason Kupferberg’s rating is based on a combination of factors that suggest caution regarding Paychex’s stock. The current valuation of Paychex shares appears high, especially when considering the uncertain macroeconomic environment and potential challenges in the unemployment landscape. The stock is trading at a multiple of 29 times the projected earnings for fiscal year 2026, which seems expensive given these uncertainties.
Additionally, while Paychex’s acquisition of PYCR is expected to contribute to revenue growth, the organic growth rate is projected to be modest at 5%. The focus will be on how the company disaggregates revenue growth between organic and acquisition-related contributions in its fiscal year 2026 guidance. Despite some positive indicators, such as healthy new business formations, the overall backdrop remains relatively neutral, leading to a cautious outlook and a Sell rating with a price objective of $135.