Stifel maintains Buy on Paylocity stock, reiterates $235 target

On Monday, Stifel analysts reaffirmed their confidence in Paylocity Holding (NASDAQ:PCTY), maintaining a Buy rating and a steady price target of $235.00. The decision comes amidst a period of economic uncertainty and a backdrop of slower growth rates for companies with seat-based revenue models. According to InvestingPro data, 13 analysts have recently revised their earnings estimates upward, while the company maintains impressive gross profit margins of nearly 69%.

Stifel’s analysis indicates a conservative forecast for Paylocity’s fiscal year 2026, with an expected subscription revenue growth of 8.7%, a slight decrease from the previous estimate of around 10%. This adjustment reflects a cautious approach due to potential challenges such as more difficult year-over-year comparisons following a strong performance and the possibility of lower interest rates affecting float income. The company has demonstrated solid growth, with revenue increasing by 14.63% over the last twelve months.

Despite the reduced expectations for subscription revenue growth, Stifel suggests that the impact on Paylocity’s profitability will be minimal. The firm anticipates a modest 30 basis points increase in core margins, excluding float, to about 22.9%, while all-up reported operating margins may see a decline of approximately 100 basis points to 29.3%.

The analysts underscore that a conservative outset for FY26 might be seen in a positive light by investors, as it allows Paylocity to potentially exceed expectations as the fiscal year progresses. The reaffirmed price target of $235 implies that Stifel’s outlook on the company remains positive despite the minor adjustments to future estimates.

In other recent news, Paylocity Holding Corp. reported its third-quarter earnings for 2025, exceeding Wall Street expectations. The company announced an earnings per share (EPS) of $2.43, surpassing the forecasted $2.13, and revenue of $454.55 million, which was above the anticipated $442 million. Paylocity’s recurring and other revenue increased by 15% year-over-year, reaching $421.1 million, while maintaining a strong adjusted gross profit margin of 77%. The firm also raised its fiscal year guidance, expecting total revenue to range between $1.580 billion and $1.585 billion.

The company’s strategic focus on product innovation and market expansion, particularly in the mid-market segment, has been a key driver of this growth. Paylocity highlighted continued investment in AI and product innovation as significant contributors to its performance. The integration of Airbase, a recent acquisition, is progressing well, with positive early signs from the market. Additionally, Paylocity’s broker channel performance remained strong, with channel referrals accounting for over 25% of new business in the third quarter.

Analyst feedback from firms like Jefferies has been positive, noting the company’s consistent execution and strategic investments as factors supporting its robust performance.

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