In a report released yesterday, Jared Levine from TD Cowen maintained a Buy rating on Paycom, with a price target of $200.00.
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Jared Levine’s rating is based on a combination of factors that highlight both challenges and opportunities for Paycom. Despite softer than expected third-quarter results and the affirmation of FY25 guidance, which fell short of investor expectations for an increase, Levine sees potential in Paycom’s strategic moves. The company has a significant share repurchase authorization of $1 billion, which represents about 10% of its market cap, providing a cushion and potential upside for investors.
Moreover, Paycom continues to demonstrate strong execution in driving profitability, as evidenced by an expansion in its adjusted gross margin excluding float. While the company has not detailed expected cost savings from recent layoffs, Levine suggests that these could lead to underappreciated margin expansion in FY26. Additionally, the company’s investment in AI, with a capital expenditure of approximately $100 million, indicates a forward-looking approach that could enhance future growth prospects. These factors contribute to Levine’s Buy rating, reflecting an attractive risk-reward profile at the current valuation.
In another report released on October 24, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a $231.00 price target.