On Monday, TD Cowen made an adjustment to Paylocity Holding's (NASDAQ:PCTY) financial outlook. Analyst Jared Levine reduced the price target on the company's shares to $228.00, down from the previous target of $235.00. Despite this change, Levine maintained a Buy rating on the stock. According to InvestingPro data, Paylocity maintains impressive gross profit margins of 68.7% and boasts a "GREAT" financial health score, supported by strong cash flows and solid balance sheet metrics.
The revision in the price target comes after Levine updated revenue estimates, factoring in an increase in modeled float revenue. This adjustment is based on the latest expectations for federal funds rate cuts. As a result of the higher revenue projections, Levine also increased the estimates for adjusted EBITDA and free cash flow (FCF), citing improved leverage on general and administrative (G&A) as well as sales and marketing (S&M) efficiency.
Levine's revised financial model now anticipates a free cash flow margin of 20.1% for the fiscal year 2025, 20.7% for 2026, and 21.6% for 2027. The new price target of $228 is based on a 33x multiple of the calendar year 2026 estimated enterprise value to free cash flow (EV/FCF).
The adjustment reflects a detailed analysis of Paylocity's financial health and market position. Levine's maintained Buy rating suggests a continued positive outlook on the company's performance, despite the lowered price target. Investors will be watching the company's fiscal metrics closely in the coming years to see if Paylocity can achieve the forecasted free cash flow margins.
In other recent news, Paylocity Holding Corporation reported robust Q1 FY2025 results, with total revenue reaching $363 million, marking a 14.3% increase compared to the same period last year. Following the acquisition of Airbase and the launch of its AI Assistant, the company has raised its full-year revenue guidance for FY2025 to be between $1.427 and $1.442 billion.
Finance firms BMO Capital Markets and TD Cowen have shown confidence in Paylocity's growth, raising their stock price targets to $240 and $235 respectively, while maintaining positive ratings.
In other company news, Paylocity recently held its annual meeting confirming the election of its board of directors and the ratification of KPMG LLP as its independent registered public accounting firm for the fiscal year ending June 30, 2025. These recent developments highlight Paylocity's commitment to strong corporate governance and financial oversight.
Please note that these are recent developments and do not offer a comprehensive view of the company's financial health or future performance.
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