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On Friday, TD Cowen’s analysts showed confidence in Paylocity Holding (NASDAQ:PCTY) by increasing the stock’s price target from $228.00 to $242.00, while maintaining a Buy rating. According to InvestingPro analysis, the stock appears slightly undervalued, with impressive financial metrics including a 68.67% gross profit margin and strong revenue growth of 16.87% over the last twelve months. Analyst Jared Levine highlighted the company’s sustained momentum and strong financial performance, expecting the stock to outperform its competitors. Levine noted Paylocity’s impressive combination of growth excluding float and free cash flow (FCF) margins, as well as its track record of surpassing expectations.
Levine’s commentary underscored the company’s solid results, mentioning a "healthy ex float beat & raise." This refers to the company’s performance excluding float, or the funds held during processing, which exceeded forecasts. The analyst also praised Paylocity for its consistency and the strategic positioning of its updated fiscal year 2025 guidance, which seems to set the stage for continued strong performance.
The revised price target is based on a 34x multiple of the company’s projected enterprise value to free cash flow (EV/FCF) for the calendar year 2026. Current trading metrics from InvestingPro show the stock trades at an EV/EBITDA multiple of 35.81x and a P/E ratio of 52.21x, reflecting the market’s high growth expectations. Levine’s optimism is rooted in the company’s financial projections and its ability to maintain strong growth and profitability, as evidenced by its consistent revenue CAGR of 25% over the past five years.
The positive outlook from TD Cowen comes as Paylocity continues to demonstrate robust growth and financial health, which, according to Levine, should lead to favorable reactions from the market. With higher estimates and a new price target, Paylocity is positioned to capture investor interest due to its compelling growth prospects and financial discipline.
In summary, Paylocity’s recent performance and prudent guidance update have led TD Cowen to raise their price target on the stock, signaling confidence in the company’s future trajectory. Investors will be watching to see if Paylocity can maintain its momentum and continue to exceed market expectations.
In other recent news, Paylocity Holding Corporation has been the focus of several analyst upgrades following its strong financial performance in the second quarter of fiscal year 2025. BMO Capital Markets analyst Daniel Jester increased the price target from $240 to $250, citing the company’s surpassing of expectations and continued mid-teen growth rate. Similarly, KeyBanc Capital Markets adjusted its price target to $250 from $220, retaining an Overweight rating on the company’s shares, while Needham analysts increased their price target to $250 from the previous $220, maintaining a Buy rating.
On the other hand, JMP Securities analyst Devin Ryan set a higher price target of $270, maintaining a Market Outperform rating on the company’s shares. Lastly, Citi analysts led by Steven Enders increased their price target for Paylocity shares to $246 from the previous target of $231, reiterating a Buy rating. These recent developments reflect a positive outlook on the company’s potential for long-term capital appreciation, based on its innovative product offerings, strategic acquisitions, and effective leadership.
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