Paylocity, the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Michael Funk from Bank of America Securities maintained a Hold rating on the stock and has a $210.00 price target.
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Michael Funk’s rating is based on Paylocity’s strong performance in the fourth quarter, where the company exceeded revenue expectations due to increased adoption of its platform. The company reported a 12% year-over-year revenue growth, surpassing the anticipated 8.6%, and showed improvements in gross and operating margins. However, despite these positive results, the guidance for fiscal year 2026 indicates a slowdown in growth, with expected recurring revenue and total revenue growth of 10% and 8%, respectively, compared to the previous year’s 15% and 14%. This deceleration is attributed to stagnant workforce levels and a gradual increase in the Airbase ramp.
Additionally, while Paylocity’s client count and average revenue per user (ARPU) remained stable, indicating a solid foundation, there are concerns about limited new employee additions due to customer caution and a challenging macroeconomic environment. The company has maintained its operating leverage, but the integration of Airbase has temporarily impacted operating margins. Given these factors, Michael Funk has opted for a Hold rating, reflecting a balanced view of Paylocity’s current performance and future growth prospects.
Funk covers the Technology sector, focusing on stocks such as AST SpaceMobile, NICE, and Guidewire. According to TipRanks, Funk has an average return of -8.2% and a 36.67% success rate on recommended stocks.
In another report released yesterday, Barclays also maintained a Hold rating on the stock with a $195.00 price target.