On Monday, Raymond (NS:RYMD) James made a significant adjustment to the stock rating of Paycor HCM Inc (NASDAQ: NASDAQ:PYCR), moving it from Outperform to Market Perform. This decision comes in the wake of last week's announcement that Paychex (NASDAQ: NASDAQ:PAYX) intends to acquire Paycor for $22.50 per share, which equates to an enterprise value of approximately $4.1 billion.
The offered purchase price represents a 21% premium over Paycor's share price as of January 3, and a 19% premium on the 20-day volume-weighted average price (VWAP).
Analysts at Raymond James have indicated that they do not anticipate a higher bid for Paycor, given the agreement to the deal by its majority owner, Apax (HN:IBC) Partners, and considering Paychex as a strategic buyer. The acquisition is expected to be finalized in the first half of 2025, and based on current projections, there seems to be little potential for additional upside for Paycor's investors.
The transaction's terms reflect a valuation that is approximately five times the CY25 sales projection for Paycor. This acquisition is a strategic move by Paychex, a company not currently covered by Raymond James, to expand its footprint in the human capital management sector.
Investors and stakeholders of Paycor have been advised of the updated rating and the rationale behind the downgrade by Raymond James. The firm has provided further insights on the deal in a previous note, which elaborates on the implications of the acquisition for both Paycor and the broader market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.