Dayforce stock target cut to $70 by Piper Sandler, keeps Overweight

On Thursday, Piper Sandler adjusted its outlook on Dayforce (NYSE: DAY), reducing the stock’s price target from $83.00 to $70.00, while maintaining an Overweight rating. The adjustment follows Dayforce’s release of first-quarter results, which exceeded expectations with overall revenues reaching $482 million, marking an 11.7% year-over-year increase. The growth was largely attributed to the Dayforce recurring revenue excluding float and currency effects, which rose by 16% year-over-year to $323 million. The stock, currently trading at a high earnings multiple of 362x, has seen a significant decline of about 33% over the past six months, according to InvestingPro data.

The company’s performance was buoyed by a significant addition of net new customers, which increased by 53 in the quarter, bringing the total to 6,929. Additionally, there was a noted 11.5% increase in recurring revenue per customer. Dayforce highlighted its resilience amidst economic pressures, noting no discernible impact from macroeconomic factors or tariffs. Key positive indicators included a robust sales pipeline and on-schedule project completions, as well as employment levels that met the company’s forecasts. The company maintains impressive gross profit margins of 50.7% and operates with a moderate debt-to-equity ratio of 0.48, as revealed by InvestingPro’s comprehensive financial health analysis.

Despite the strong first-quarter showing, Dayforce’s stock felt pressure due to second-quarter targets slightly trailing behind consensus expectations. However, the firm has reaffirmed its full-year 2025 guidance on a constant currency basis. The company’s anticipation of three rate cuts in 2025 is expected to be counterbalanced by the robust performance in the first quarter, which should mitigate potential headwinds to float revenue targets. InvestingPro analysis indicates that net income is expected to grow this year, with analysts projecting profitability. Subscribers can access 10+ additional ProTips and detailed financial metrics in the Pro Research Report.

Piper Sandler’s revised price target reflects a more conservative valuation in light of the modest second-quarter outlook. Nevertheless, the Overweight rating suggests that the firm remains optimistic about Dayforce’s growth prospects and operational strength. The company’s ability to maintain its FY25 targets amidst expected rate cuts and its continued customer growth are seen as key drivers for its sustained performance. According to InvestingPro’s Fair Value analysis, the stock currently appears slightly undervalued, with analyst targets ranging from $55 to $95 per share.

In other recent news, Dayforce Inc. reported first-quarter earnings for 2025 that exceeded analyst expectations. The company achieved an earnings per share (EPS) of $0.58, surpassing the forecasted $0.5461, and reported revenue of $481.8 million, which was higher than the anticipated $476.98 million. Despite these positive financial results, the company announced a 5% reduction in its workforce, which has raised concerns among investors. In addition, Dayforce maintained its full-year revenue guidance between $1.929 billion and $1.944 billion, while projecting a 40% year-over-year increase in first-half bookings. Analyst firms have not yet provided any upgrade or downgrade on the stock. The company continues to leverage its innovative offerings, such as the AI Copilot and Dayforce Wallet, which have contributed to its growth momentum. However, macroeconomic factors and strategic decisions, such as workforce reductions, have introduced uncertainty in the market.

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