ADP stock price target unchanged at $315 as Jefferies maintains Hold rating

Investing.com - Jefferies maintained its Hold rating and $315.00 price target on ADP (NASDAQ:ADP) ahead of the company’s first-quarter fiscal 2025 results, scheduled for October 29. According to InvestingPro data, the stock is currently trading near its 52-week low of $272.62, with a P/E ratio of 28.7x.

The firm expects ADP to meet consensus revenue and earnings per share expectations for the quarter, noting that current estimates already reflect the impact of weaker fourth-quarter Employer Services (ES) sales performance. This outlook comes as seven analysts have recently revised their earnings estimates downward, according to InvestingPro analysis.

Jefferies highlighted that ADP’s Professional Employer Organization (PEO) segment achieved record sales in the fourth quarter, which should drive strength in the current results.

The research firm believes ADP’s previously issued EBIT margin guidance, which projected a year-over-year decline, could provide room for earnings per share upside in the results.

Despite potential for solid performance, Jefferies expressed concern that even good results might not boost the stock, citing structural concerns and noting that ADP shares currently trade at approximately a three-turn next-twelve-month P/E premium compared to Paychex.

In other recent news, ADP reported a reduction of 32,000 jobs in September, a shift from earlier expectations, following a rebenchmarking process by ADP Research. Despite this, RBC Capital has maintained its Sector Perform rating for ADP, projecting that the company’s first-quarter fiscal 2026 results will likely meet consensus estimates. RBC also anticipates potential revenue growth in the Employer Services and Professional Employer Organization segments. Additionally, ADP has introduced a new embedded payroll solution for small business software, allowing integration of payroll functions into platforms, with a notable partnership with Fiserv’s Clover. In corporate governance news, ADP has nominated Karen S. Lynch and Robert H. Swan to its Board of Directors, with elections scheduled for November 2025. Lynch brings extensive experience from her tenure at CVS Health Corporation. These developments reflect ADP’s ongoing strategic initiatives and adjustments in response to current market conditions.

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