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Investing.com - Stifel has raised its price target on Paycom Software (NYSE:PAYC) to $240.00 from $215.00 while maintaining a Hold rating on the stock. According to InvestingPro data, the stock currently trades at $247.24, with analyst targets ranging from $208 to $310.
The price target increase follows Paycom’s EBITDA margins growing 450 basis points year-over-year to 41%, exceeding Street expectations of 37.5%. This margin improvement was driven by revenue upside, G&A efficiency gains, and timing of marketing spend.
Stifel noted that Paycom’s management highlighted how the company’s focus on automation has slowed its pace of hiring, contributing to operational efficiencies.
During the quarter, Paycom launched IWant, an AI-driven search engine that parses through the company’s single database. Management described this as "the most significant product in the company’s history," though Stifel pointed out the product is not being directly monetized. InvestingPro subscribers can access 8 additional key insights and a comprehensive Pro Research Report about Paycom’s financial health and growth prospects.
The new $240 price target represents approximately 25.8 times Stifel’s calendar year 2027 EV/FCF estimates, with the firm acknowledging Paycom’s solid execution while remaining cautious as free cash flow is expected to stay flat amid heightened investments. The company maintains a strong financial health score of "GOOD" according to InvestingPro metrics, with minimal debt and robust cash flows.
In other recent news, Paycom Software reported second-quarter earnings for 2025, surpassing market expectations with an earnings per share of $2.06 compared to the forecasted $1.78, resulting in a 15.73% surprise. The company’s revenue also exceeded projections, reaching $484 million against an expected $472.01 million. Following these results, Paycom raised its full-year guidance, which contributed to KeyBanc Capital Markets increasing its price target for the company to $290 while maintaining an Overweight rating. Similarly, BMO Capital adjusted its price target for Paycom to $258, citing the company’s strong quarterly performance and raised future guidance. These developments reflect positively on Paycom’s current financial health, as indicated by the analyst firms’ responses to the earnings report.
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