Paychex price target raised to $153 from $150 at TD Cowen

TD Cowen raised its price target on Paychex stock (NASDAQ:PAYX) to $153.00 from $150.00 while maintaining a Hold rating ahead of the company’s fourth-quarter earnings report scheduled for June 25. With a current market capitalization of $55.6 billion and trading at $154.38, InvestingPro analysis suggests the stock is trading above its Fair Value.

The research firm anticipates Paychex will report fourth-quarter results slightly above Wall Street expectations, citing a stable demand and employment environment. The company’s impressive 72% gross profit margin and strong financial health metrics from InvestingPro support this optimistic outlook. TD Cowen adjusted its fourth-quarter revenue and earnings per share estimates based on better organic management solutions growth.

TD Cowen noted that while it expects solid execution from Paychex, there may be "deal noise" in the company’s results compared to consensus estimates, which the firm described as "largely stale" due to lacking Paylocity (NASDAQ:PCTY) (PYCR) contribution.

The firm raised its fiscal 2026 and fiscal 2027 earnings per share estimates slightly to account for benefits from changes in the deferred contract costs amortization period related to Paylocity.

The new $153 price target is based on a 27.5x price-to-earnings multiple on calendar year 2026 estimated earnings, according to TD Cowen. The firm maintained its neutral stance on Paychex heading into the earnings report, citing recent outperformance in the company’s shares.

In other recent news, Paychex has completed its acquisition of Paycor (NASDAQ:PYCR) for approximately $4.1 billion. This strategic move is expected to enhance Paychex’s technology and service capabilities, with projected annual cost synergies exceeding $80 million by fiscal 2026. The merger is anticipated to be accretive to Paychex’s adjusted diluted earnings per share in the same fiscal year. Additionally, Paychex has announced a 10% increase in its quarterly cash dividend, raising it to $1.08 per share.

RBC Capital has maintained its price target for Paychex at $165, highlighting stable employment levels and small business sentiment, while noting potential benefits from higher interest rates. Morgan Stanley (NYSE:MS) has reiterated an Equalweight rating on Paychex, with a price target of $150, adjusting its earnings forecasts due to the Paycor acquisition. The firm sees the acquisition as a means to expand Paychex’s total addressable market and enhance cross-selling opportunities. Furthermore, Paychex’s founder, B. Thomas Golisano, announced he will retire from the board of directors in July 2025, marking a significant transition for the company.

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