Daniel Jester, an analyst from BMO Capital, maintained the Hold rating on Paychex. The associated price target was lowered to $143.00.
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Daniel Jester has given his Hold rating due to a combination of factors impacting Paychex’s current market position. The company’s shares have underperformed recently, influenced by concerns over a cooling labor market and uncertainties surrounding new business trends and growth contributions from Paycor. While there is potential for slight revenue upside in the upcoming fiscal quarter, the overall macroeconomic environment presents challenges that could moderate growth prospects for the company.
Additionally, Paychex’s valuation is trending at or below historical averages, and despite potential benefits from revenue synergies and improvements in the second half of the fiscal year, significant efforts are needed to achieve these gains in an uneven macroeconomic landscape. The integration of Paycor and the normalization of financial models are expected to take time, leading to a balanced risk/reward scenario in the near term. As a result, Jester suggests waiting for a more favorable entry point before considering a more aggressive investment stance.
According to TipRanks, Jester is a 4-star analyst with an average return of 6.5% and a 56.63% success rate. Jester covers the Technology sector, focusing on stocks such as Intuit, Dayforce Inc, and Paychex.
In another report released on September 22, Stifel Nicolaus also downgraded the stock to a Hold with a $142.00 price target.