Paychex (PAYX – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Jason Kupferberg from Bank of America Securities maintained a Sell rating on the stock and has a $135.00 price target.
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Jason Kupferberg has given his Sell rating due to a combination of factors impacting Paychex’s performance. The company is experiencing slower organic growth in its core Management Solutions (MS) segment, which is affected by macroeconomic uncertainties such as slower client decision-making and an increase in bankruptcies. Additionally, the integration of Paychex’s recent acquisition, PYCR, is contributing to these challenges, with the revenue guidance for fiscal year 2026 being slightly below expectations.
Furthermore, the revenue growth projections, even when including PYCR, fall short of market expectations, and the core segment’s revenue growth is lagging. The company’s current valuation appears high given these growth challenges, and the PYCR acquisition is seen more as a defensive strategy. While there are some positive signs, such as the expected increase in cost synergies from the PYCR integration, the overall outlook remains pressured by factors like lower healthcare enrollment and a shift towards lower-cost plans, which are expected to continue affecting growth in the near term.
In another report released on June 18, J.P. Morgan also maintained a Sell rating on the stock with a $148.00 price target.
PAYX’s price has also changed slightly for the past six months – from $141.390 to $137.940, which is a -2.44% drop .