Paycom Software price target raised to $258 from $244 at BMO Capital

Investing.com - BMO Capital has raised its price target on Paycom Software (NYSE:PAYC) to $258.00 from $244.00 while maintaining a Market Perform rating on the stock. According to InvestingPro data, seven analysts have recently revised their earnings estimates upward for the upcoming period, with price targets ranging from $208 to $310.

The price target increase follows Paycom’s second-quarter results, which exceeded BMO’s expectations with both a beat on current performance and raised guidance for future quarters. The company maintains impressive gross profit margins of 86.2% and generated $384.9 million in free cash flow over the last twelve months.

BMO Capital highlighted the launch of IWant, Paycom’s AI Search Engine, as the company’s most significant artificial intelligence initiative to date. The search engine will be deployed across all Paycom customers during the current quarter.

The firm noted that this product launch will serve as the foundation for Paycom’s sales and marketing efforts, which aim to maintain momentum reflected in the company’s guided fourth-quarter growth improvement.

BMO Capital also mentioned that Paycom’s artificial intelligence ambitions will require some capital expenditure in the near term, keeping the firm’s free cash flow outlook stable even as revenue and EBITDA projections increase. The company currently trades at an EV/EBITDA multiple of 23.7x, with a solid financial health score according to InvestingPro analysis.

In other recent news, Paycom Software Inc. reported its Q2 2025 earnings, surpassing market expectations. The company achieved an earnings per share (EPS) of $2.06, exceeding the forecasted $1.78, representing a 15.73% surprise. Revenue also outperformed projections, reaching $484 million compared to the expected $472.01 million. These results highlight a strong performance in the quarter, despite a cautious market sentiment. The stock, however, remained unchanged in after-hours trading. The earnings report reflects positively on Paycom’s financial health and operational efficiency. Investors and analysts may find these developments noteworthy as they evaluate the company’s future prospects.

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