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Investing.com - BMO Capital has reiterated an Outperform rating on Dayforce (NYSE:DAY) with a price target of $67.00, following reports that private equity firm Thoma Bravo is considering acquiring the company. The stock’s current trading price of $66.62 aligns closely with InvestingPro’s Fair Value estimate, suggesting the market has efficiently priced the shares.
The reaffirmation comes amid Bloomberg reports suggesting Thoma Bravo’s interest in the human capital management software provider, though BMO noted it has "no insight into the potential of any transaction."
BMO Capital pointed out that Dayforce shares have underperformed compared to industry peers and traded at a discount due to a recent moderation in growth that has persisted longer than at some other SaaS HCM vendors. However, the stock has shown remarkable momentum recently, posting a 29% gain in the past week, with revenue growing at ~13.5% year-over-year. InvestingPro analysis reveals 12+ additional insights about Dayforce’s performance metrics.
Despite these challenges, BMO cited "recent bookings improvement" as a positive indicator for the company, along with "building opportunities in the large and global enterprise markets" that could drive future growth.
The financial services firm also highlighted Dayforce’s "ongoing material margin improvement potential" as another factor supporting its continued Outperform rating and $67.00 price target. The company already maintains impressive gross profit margins of ~51%, operating with a moderate level of debt and generating positive free cash flow.
In other recent news, Dayforce reported strong second-quarter 2025 earnings, with earnings per share (EPS) of $0.61, surpassing forecasts of $0.53 by 15.09%. Revenue for the quarter also exceeded expectations, reaching $464.7 million compared to the anticipated $457.93 million. KeyBanc Capital Markets reiterated its Overweight rating on Dayforce, maintaining a price target of $65.00, citing strong bookings and reaffirming the company’s 2025 recurring revenue growth guidance of 15-17%. Meanwhile, TD Cowen adjusted its price target for Dayforce to $67.00 from $69.00, expressing concerns about near-term growth. Jefferies also lowered its price target to $60.00 from $65.00, maintaining a Hold rating due to a cautious outlook. Despite these adjustments, Dayforce showed a Dayforce Core constant currency growth of 13.5%, slightly above the consensus estimate of 13.3%, and exceeded EBITDA expectations by 4%. These developments highlight a mix of positive financial performance and cautious analyst outlooks.
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