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Investing.com - BMO Capital has lowered its price target on Paylocity Holding (NASDAQ:PCTY) to $185.00 from $200.00 while maintaining an Outperform rating on the stock. The new target aligns closely with InvestingPro’s Fair Value assessment, suggesting the stock may be slightly undervalued at its current price of $139.33, despite falling 30.15% year-to-date.
The adjustment follows Paylocity’s fiscal first-quarter results, which BMO described as consistent with previously flagged upside expectations.
BMO noted that Paylocity made a small increase to its fiscal year 2026 recurring revenue growth guidance, excluding float, which the firm considered "an okay outcome against tempered expectations" following ADP’s recent results.
Despite expressing caution about the entire human capital management and payroll sector due to labor market and demand uncertainties, BMO maintains Paylocity as its only Outperform-rated stock in this category.
The firm cited Paylocity’s steady execution, growth potential as it expands into other back-office functions like finance and IT, and a clearer path to margin improvement with new, higher long-term targets as reasons for the continued positive outlook. Paylocity already boasts impressive gross profit margins of 68.94% and maintains a strong balance sheet with more cash than debt. For deeper insights into Paylocity’s financial health and growth prospects, InvestingPro offers a comprehensive research report with additional metrics and analysis.
In other recent news, Paylocity Holding reported its first-quarter fiscal 2026 earnings, revealing a mixed financial performance. The company posted earnings per share (EPS) of $0.86, which was significantly below the forecast of $1.57, marking a 45.22% miss. However, Paylocity’s revenue of $408.2 million exceeded expectations, showing a 12% year-over-year growth. Despite the earnings miss, the revenue growth highlights the company’s positive trajectory in terms of sales. In related developments, Mizuho has adjusted its price target for Paylocity to $180 from $220, citing peer multiple compression, though it maintained an Outperform rating. Mizuho noted that Paylocity delivered "another solid quarter" by surpassing recurring and other revenue estimates by approximately $6 million and exceeding EBITDA estimates by $13 million. These recent developments provide investors with a nuanced view of Paylocity’s financial health and market expectations.
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