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Investing.com - Needham has reiterated its Buy rating and $250.00 price target on Paylocity Holding (NASDAQ:PCTY), a $10.4 billion market cap company currently trading below its Fair Value, while modestly lowering its fiscal year 2026 estimates due to macroeconomic uncertainty. The company maintains impressive gross profit margins of 69% and has delivered 14.6% revenue growth over the last twelve months.
The research firm reduced its FY26 recurring revenue growth forecast from 10.3% to 9.6% and trimmed its earnings per share estimate by $0.05 to $7.43, citing expectations that management will provide more conservative guidance than in typical years. InvestingPro data shows the company trading at a P/E ratio of 46, with analysts maintaining a bullish consensus and targets ranging from $142 to $270.
Needham emphasized that its second-quarter calendar year 2025 industry checks have not revealed any changes to demand or sales cycles compared to the first quarter, but the firm is adjusting estimates to reflect anticipated conservatism in the second half of calendar year 2025.
The firm expects Paylocity to establish guidance that reflects moderation in employment growth trends while also accounting for Airbase cross-selling opportunities, which Needham believes will be more heavily weighted toward the second half of fiscal year 2026 than the first half.
Needham maintains its view that Paylocity can sustain over 10% recurring revenue growth in a "normal" market environment, though it believes fiscal year 2026 does not yet meet that "normal" threshold.
In other recent news, Paylocity Holding Corp. reported impressive third-quarter earnings for 2025, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $2.43, exceeding the forecast of $2.13, and reported revenue of $454.55 million, surpassing the anticipated $442 million. Analysts from KeyBanc have maintained an Overweight rating on Paylocity with a price target of $220, while Stifel has reiterated a Buy rating with a $235 price target. Both firms acknowledge a conservative outlook for fiscal year 2026, with anticipated subscription revenue growth adjustments due to economic uncertainties. Paylocity’s strong performance was driven by robust growth in the broker channel and continued investment in AI and product innovation. The company has also been recognized for its strategic focus on product development, which has contributed to a significant expansion of its product suite. Looking ahead, Paylocity projects recurring revenue growth of 14% for the full fiscal year 2025, indicating continued optimism about its financial trajectory.
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