Paylocity added to DA Davidson Best-of-Breed Bison initiative

DA Davidson keeps a Buy rating and $215 price target on Paylocity while adding the stock to the firm’s Best-of-Breed Bison initiative that seeks to identify the highest quality companies with “strong competitive positioning and exceptional financials”. Outside of the four-quarter effect of COVID to the downside, and recent rate-induced float revenue upside, Paylocity’s revenue performance has been “highly predictable and steady”, with recurring revenue growth that has never dropped below 10%, the analyst tells investors in a research note. The company also operations in a “sizable market, that still mostly hasn’t modernized’, the firm adds, estimating that only around one-fourth of Paylocity’s target market has migrated to using a modern, Cloud-based payroll provider, with the rest using a mix of legacy service bureaus, regional firms, CPAs, or even in-house systems. DA Davidson expects the trend away from these other options to continue.