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Investing.com - Stifel has reduced its price target on Paychex (NASDAQ:PAYX) to $137.00 from $142.00 while maintaining a Hold rating on the payroll services provider. According to InvestingPro data, the stock is currently trading near its 52-week low of $119.02, with analyst targets ranging from $122 to $150.
The adjustment follows Paychex’s fiscal first-quarter results, which showed 3.5% organic revenue growth and 5% EPS growth amid what Stifel describes as a stable macroeconomic backdrop for employment and bankruptcies. The company maintains impressive gross profit margins of 72.83%, though InvestingPro data shows 5 analysts have recently revised their earnings expectations downward.
Paychex maintained its fiscal year 2026 revenue guidance while slightly raising its EPS outlook to reflect better cost synergies from its recent acquisition. The company now projects 4.5-5.5% organic revenue growth plus 30-50 basis points from revenue synergies, with EPS growth of 9-11%.
Stifel noted that Paychex’s Paycor (PYCR) business is growing at 8-9%, below the double-digit target for fiscal 2026, which reflects some integration-related disruption. The firm continues to assume organic revenue growth below the low end of guidance at 4.0-4.5% to account for macroeconomic uncertainty.
The stock currently trades at a 32% premium to the equal-weight S&P 500 EPS multiple, which Stifel indicates is well below recent trends, suggesting potential for rerating if organic growth reaccelerates.
In other recent news, Paychex reported its first-quarter fiscal year 2026 earnings, revealing an adjusted diluted earnings per share (EPS) of $1.22, slightly surpassing the forecast of $1.20. The company also achieved a 17% increase in total revenue, reaching $1.54 billion, which met expectations. Despite these positive financial results, Wolfe Research lowered its price target for Paychex to $130, maintaining an Underperform rating. Similarly, BMO Capital reduced its price target to $140, citing business uncertainties and maintaining a Market Perform rating. Analysts from BMO Capital noted areas of uncertainty in Paychex’s business, with expectations for improvement in the latter half of fiscal year 2026. These recent developments reflect mixed sentiments from analysts regarding the company’s future performance.
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