U.S. stocks edge higher; solid earnings season continues
On Thursday, JMP analyst Devin Ryan confirmed a Market Outperform rating and a $270.00 price target for Paylocity Holding (NASDAQ:PCTY), underscoring the company’s potential for long-term capital appreciation. According to InvestingPro data, this target represents a 42% upside from the current price of $190.31, while the stock trades at a P/E ratio of 52.9x. The company maintains strong analyst support, with a consensus recommendation of 1.7 (Buy). Ryan highlighted several key factors contributing to this positive outlook, including Paylocity’s ongoing product differentiation through rapid innovation, particularly with its new AI Assistant.
Paylocity’s recent acquisition of Airbase was also noted as a significant move, allowing the company to offer a combined human capital management (HCM) and spend-management solution, including expense management and accounts payable, to its approximately 40,000 customers on a single platform. This development positions the company to tap into a nearly $20 billion total addressable market (TAM), not counting the spend management opportunity.
The analyst pointed out Paylocity’s performance as a Rule of 40 business, which indicates a balance of growth and profitability, with the company reporting 17% recurring revenue growth and 27% operating margins in its second fiscal quarter. The leadership team, including CEO Toby Williams, CFO Ryan Glenn, and Executive Chairman Steve Beauchamp, was also praised for their effective management.
Furthermore, JMP has maintained its financial forecasts for Paylocity, projecting a non-GAAP earnings per share (EPS) of $6.87 for fiscal year 2025, which is above the consensus of $6.69, with adjusted EBITDA of $548 million on revenue of $1.566 billion, closely aligning with the consensus revenue estimate of $1.564 billion. With a revenue growth of 16% in the last twelve months and a five-year revenue CAGR of 25%, Paylocity demonstrates strong growth momentum. For deeper insights into Paylocity’s financials and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence. For fiscal year 2026, the firm expects a non-GAAP EPS of $7.81, compared to the consensus of $7.22, with adjusted EBITDA of $628 million on revenue of $1.767 billion, surpassing the consensus revenue estimate of $1.728 billion. Additionally, for fiscal year 2027, JMP anticipates a non-GAAP EPS of $9.04, which exceeds the consensus of $8.31, with adjusted EBITDA of $755 million on revenue of $2.020 billion, significantly higher than the consensus revenue estimate of $1.916 billion.
In other recent news, Paylocity Holding Corporation reported its second-quarter earnings, revealing a mixed performance. The company exceeded revenue expectations with $377 million, surpassing the anticipated $367.01 million, marking a 16% year-over-year increase. However, Paylocity’s earnings per share (EPS) fell short, coming in at $0.66 against the forecasted $1.42. This earnings miss has raised concerns among investors despite the strong revenue growth. Additionally, Paylocity maintains a strong cash position with $482.4 million in cash and cash equivalents, alongside $325 million in debt.
In analyst updates, TD Cowen adjusted its price target for Paylocity to $229 from $242, while maintaining a Buy rating. This revision reflects updated revenue forecasts and anticipated growth in adjusted EBITDA and free cash flow. Analyst Jared Levine noted the adjustment was influenced by expectations for the federal funds rate and Paylocity’s upcoming earnings report. In terms of future guidance, Paylocity projects fiscal year 2025 total revenue between $1.558 billion and $1.568 billion, indicating an 11% growth. The company continues to focus on product expansion and integrating AI technologies to enhance its offerings.
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