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Investing.com - Automatic Data Processing (NASDAQ:ADP) received new coverage from BMO Capital on Thursday, with analysts assigning a Market Perform rating and setting a $340.00 price target. According to InvestingPro data, analyst targets for ADP currently range from $291 to $350.
BMO Capital noted that ADP shares have performed well over the past year, delivering a 34.4% total return, benefiting from the company’s relative stability during an uneven macroeconomic environment compared to smaller competitors that have experienced slowing growth. The stock’s beta of 0.77 confirms its lower volatility profile.
The research firm highlighted ADP’s diverse business lines, improved product offerings, and track record of delivering durable double-digit earnings per share growth as key strengths of the human capital management and payroll software provider.
BMO Capital also pointed to ADP’s healthy balance sheet as a positive factor contributing to the company’s performance in the current market conditions.
Despite acknowledging these attractive business characteristics are likely to persist, BMO Capital indicated that ADP shares are currently trading at the high end of their historical price-to-earnings range, with a P/E ratio of 31.4x and an EV/EBITDA multiple of 21.3x, leading analysts to seek a more attractive entry point for the stock. InvestingPro analysis suggests the stock is currently trading above its Fair Value.
In other recent news, ADP announced its updated financial targets during an investor day presentation, projecting revenue growth of 6-7% and earnings per share growth of 9-11% over the next three to four years. These targets exceed the fiscal 2026/2027 consensus estimates and reflect ADP’s focus on strategic priorities such as artificial intelligence and global expansion. RBC Capital maintained a Sector Perform rating for ADP, while Stifel reiterated a Hold rating, both firms highlighting the company’s growth strategy and technology roadmap. Mizuho (NYSE:MFG) raised its price target for ADP to $332, citing strong execution and product improvements that have driven growth toward the high end of previous targets. Conversely, UBS lowered its price target to $315, acknowledging a revised growth outlook and valuation concerns. ADP’s Professional Employer Organization segment is now expected to grow at 6-8%, down from previous forecasts. The company continues to leverage its human capital management expertise with AI-powered solutions and partnerships. ADP’s strategic initiatives aim to enhance client services and employee experiences, supported by its extensive data capabilities.
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