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Investing.com - Stifel has reduced its price target on Paychex (NASDAQ:PAYX) to $142.00 from $152.00 while maintaining a Hold rating, citing a more conservative outlook on potential growth acceleration in the second half of fiscal year 2026. The stock, currently trading at $130, sits near its 52-week low of $129.33, with InvestingPro data showing 5 analysts recently revising their earnings estimates downward.
The firm adjusted its fiscal 2026 revenue estimate below consensus, from $6.54 billion with 4.8% organic growth to $6.47 billion with 3.5% organic growth. Stifel maintained its margin expectations of a 50 basis point year-over-year improvement, which lowered its earnings per share forecast from $5.44 to $5.38. The company maintains impressive gross profit margins of 72.35%, according to InvestingPro data, which offers 10+ additional insights about Paychex’s financial health.
The revisions primarily reflect reductions to second-half fiscal 2026 revenue growth projections, while first and second quarter estimates remain unchanged. The updated forecast assumes 3.5% organic growth compared to the previous 4.5% estimate.
Stifel noted that while the operating environment for Paychex appears stable, it does not seem poised for improvement in key areas including employment, new business creation, bankruptcies, and interest rates.
The firm observed that Paychex is trading at approximately a 40% premium to the equal-weight S&P 500, well below its historical average of around 55%, suggesting the stock already reflects some expectations of incremental deceleration.
In other recent news, Paychex is anticipated to report first-quarter results that slightly exceed analysts’ expectations, with RBC Capital projecting results at the higher end of the company’s guidance range. RBC Capital has reiterated its Sector Perform rating with a price target of $150, while TD Cowen has adjusted its price target to $140, maintaining a Hold rating due to limited near-term catalysts. BMO Capital has initiated coverage on Paychex with a Market Perform rating and a $160 price target, highlighting the strategic significance of Paychex’s recent acquisition of Paycor. This acquisition is seen as expanding Paychex’s market opportunities across both customers and products.
Additionally, Paychex’s Board of Directors has declared a quarterly cash dividend of $1.08 per share, payable on August 29, 2025, to shareholders of record as of July 21, 2025. RBC Capital has also maintained its $165 price target, noting mixed growth trends and improved cost synergies from the Paycor integration. However, they observed that the Management Solutions segment experienced slowed organic growth, attributed to declining checks per client and challenges related to the Paycor integration. These recent developments provide insights into Paychex’s strategic direction and financial performance.
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