Morgan Stanley analyst James Faucette has maintained their neutral stance on ADP stock, giving a Hold rating yesterday.
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James Faucette has given his Hold rating due to a combination of factors affecting Automatic Data Processing’s performance. The company reported strong overall results in its Employer Services and PEO segments, with profitability benefiting from its unique client funds interest strategy. However, there was a notable weakness in bookings, primarily due to delays in decision-making within the domestic HR outsourcing business, which targets the upper middle-market and lower enterprise segments, leading to longer sales cycles.
Additionally, while there was some improvement in the international business, it was not enough to counterbalance earlier weaknesses. The limited visibility into intra-year bookings trends adds uncertainty, making it challenging to assess the full-year bookings target’s achievability. Despite these challenges, ADP’s focus on conservative retention and product contributions is expected to drive near-term revisions, justifying the Hold rating.
In another report released yesterday, Jefferies also maintained a Hold rating on the stock with a $315.00 price target.