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Investing.com - Mizuho has reduced its price target on Paylocity Holding (NASDAQ:PCTY) to $180.00 from $220.00 while maintaining an Outperform rating on the stock. This new target aligns closely with InvestingPro’s Fair Value assessment, which suggests the stock is currently undervalued despite trading near its 52-week low of $137.57.
The adjustment comes despite Paylocity delivering what Mizuho described as "another solid quarter," with the company exceeding recurring and other revenue estimates by approximately $6 million and EBITDA by $13 million. InvestingPro data shows the company maintains impressive gross profit margins of 68.94% and has generated $405.15 million in levered free cash flow over the last twelve months. Subscribers to InvestingPro can access 15+ additional ProTips and a comprehensive research report on Paylocity, one of 1,400+ US equities covered in-depth on the platform.
Paylocity has raised its full-year guidance to approximately 10% revenue growth ($1,613 million) and an EBITDA margin of around 8%. The company also introduced new long-term targets, including over $3 billion in revenue and a 40-45% adjusted EBITDA margin. This ambitious outlook builds on Paylocity’s strong 13.74% revenue growth over the last twelve months, with current annual revenue standing at $1.6 billion.
Mizuho noted that macroeconomic trends remain better than feared, with employment levels tracking above expectations, though Paylocity’s management continues to assume flat employment for the full year in line with typical guidance practices.
The firm remains bullish on Paylocity’s cross-sell opportunity and views the stock’s 30% year-to-date decline (compared to IGV +12%) as "overly punitive given consistent execution," with the lower price target attributed to multiple compression across peers.
In other recent news, Paylocity Holding reported its first-quarter fiscal 2026 earnings, displaying a mixed financial performance. The company announced earnings per share (EPS) of $0.86, which was significantly below the forecasted $1.57, resulting in a 45.22% miss. Despite the EPS shortfall, Paylocity’s revenue reached $408.2 million, exceeding expectations and demonstrating a 12% increase compared to the previous year. These developments highlight the company’s ability to grow its revenue even when earnings per share fall short of projections. Investors and analysts may view the revenue growth as a positive indicator of business momentum. However, the EPS miss could raise questions about cost management or other financial factors. These recent developments are likely to influence future assessments of Paylocity’s financial health.
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