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Investing.com - Payroll services provider ADP (NASDAQ:ADP) saw its stock decline 6-7% on Thursday after Stifel lowered its price target to $290 from $318 while maintaining a Hold rating. The stock closed at $263.65, down from $279.63 the previous day, with InvestingPro data showing the RSI suggests ADP is now in oversold territory and trading near its 52-week low of $260.24.
The price target reduction came despite ADP reporting first-quarter fiscal 2025 results that beat expectations, with revenue growing 6% at constant currency and earnings per share increasing 7% year-over-year. According to InvestingPro data, ADP’s revenue has grown 7.07% over the last twelve months, with the company maintaining impressive gross profit margins of 48.39%.
ADP maintained its fiscal 2026 guidance, projecting 5-6% revenue growth and 8-10% EPS growth with margins expanding 50-70 basis points. The company also reiterated its bookings growth forecast of 4-7%. Despite market concerns, ADP has maintained dividend payments for 52 consecutive years, with a current yield of 2.36%.
Stifel analyst David Grossman noted that management lowered its pays-per-control guidance from 0-1% growth to flat, though this adjustment is expected to have an "immaterial impact on revenue growth."
The negative market reaction to ADP’s outlook appeared to affect the broader human capital management sector, with other companies in the space declining 5-7% on Thursday.
In other recent news, Automatic Data Processing (ADP) has reported its Q1 FY2026 earnings, surpassing analyst expectations. The company achieved an earnings per share (EPS) of $2.49, exceeding the forecasted $2.44. Additionally, ADP posted revenue of $5.2 billion, outperforming the anticipated $5.14 billion. This revenue growth of 7.1% surpassed Street expectations of 6.2%, while earnings per share growth of 6.7% also exceeded the Street’s forecast of 4.4%. Despite these positive financial results, Jefferies has adjusted its price target for ADP to $245 from $315, maintaining a Hold rating on the stock. These developments reflect a mixed outlook for the company, as noted by Jefferies. Investors continue to monitor broader market trends and sentiment impacting ADP’s stock performance.
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