Chip stocks fall with Nvidia after data center rev disappointment
On Tuesday, TD Cowen analysts adjusted their outlook for Paylocity Holding (NASDAQ:PCTY), a leading provider of cloud-based payroll and human capital management software solutions with a market capitalization of $11 billion. The firm’s analyst, Jared Levine, revised the price target to $229.00, down from the previous $242.00, while reiterating a Buy rating on the stock. According to InvestingPro data, analysts maintain a bullish consensus on PCTY, with price targets ranging from $200 to $270.
Levine’s update was prompted by new expectations for the federal funds rate and considerations ahead of Paylocity’s third-quarter earnings report, scheduled for May 1, 2025. The analysts at TD Cowen have updated their revenue forecasts to reflect a stronger expected growth excluding float revenue, which is somewhat balanced by a projected decrease in float revenue itself. The company has demonstrated solid performance with a 16% revenue growth over the last twelve months and impressive gross margins of 68.6%, according to InvestingPro analysis. This adjustment in revenue projections has led to an increase in the anticipated adjusted EBITDA and free cash flow (FCF) estimates.
The revised estimates now include an ex float revenue growth of 13.5% for the fiscal year 2025, 11.2% for the fiscal year 2026, and 12.0% for the fiscal year 2027. Along with these growth projections, the analysts anticipate a free cash flow margin of 20.7% for FY25, 21.7% for FY26, and 22.7% for FY27.
The new price target of $229 is based on a 32 times multiple of the expected enterprise value to free cash flow (EV/FCF) for the calendar year 2026. TD Cowen’s valuation reflects a meticulous analysis of Paylocity’s financial outlook and market positioning as the company approaches its next earnings report.
In other recent news, Paylocity Holding Corporation reported its second-quarter financial results for fiscal year 2024, revealing a mixed performance. The company exceeded revenue expectations with a total of $377 million, surpassing the anticipated $367.01 million, marking a 16% year-over-year increase. However, the earnings per share (EPS) fell short of forecasts, coming in at $0.66 compared to the expected $1.42. This earnings miss has raised concerns among investors despite the strong revenue figures. Paylocity also reported a robust cash position with $482.4 million in cash and cash equivalents. The company continues to focus on product innovation, with recent launches including an AI Assistant Chatbot and a Headcount Planning tool. Analysts noted the company’s ongoing efforts to expand its product offerings and integrate AI technologies, which are seen as key drivers for future growth. Additionally, Paylocity’s management provided guidance for fiscal year 2025, projecting total revenue between $1.558 billion and $1.568 billion, reflecting an 11% year-over-year growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.