Paycom: Solid Performance and Growth Prospects Balanced by Valuation Concerns – Hold Rating Justified

Analyst Jared Levine from TD Cowen maintained a Hold rating on Paycom (PAYC – Research Report) and increased the price target to $241.00 from $232.00.

Jared Levine’s rating is based on a combination of factors that reflect both positive momentum and certain valuation concerns for Paycom. The company has shown solid trends with a modest beat in its first-quarter results and has raised its fiscal year 2025 growth and margin guidance. This positive performance is supported by ongoing momentum in new client sales and improvements in client retention, driven by enhanced sales training processes and product initiatives.
However, despite these positive developments, Levine’s Hold rating considers the recent outperformance of Paycom’s shares, which have risen 12% year-to-date, leading to a relatively full valuation compared to its peers. The stock’s current valuation, at 26.5 times the estimated enterprise value to free cash flow for 2026, is slightly higher than comparable companies. This valuation aspect tempers the potential for a more pronounced positive reaction in the stock price, justifying the Hold rating.

Levine covers the Technology sector, focusing on stocks such as Paycom, Dayforce Inc, and Paylocity. According to TipRanks, Levine has an average return of -4.0% and a 35.71% success rate on recommended stocks.

In another report released on April 28, Citi also maintained a Hold rating on the stock with a $224.00 price target.