Stifel raises Paycom stock price target to $215 from $187

On Thursday, Stifel analysts adjusted their outlook on Paycom Software (NYSE:PAYC), raising the price target to $215.00 from the previous $187.00, while keeping a Hold rating on the company’s shares. The move comes after Paycom reported a modest top-line beat for the first quarter, with recurring revenue exceeding $500 million for the first time. The company also saw a notable 10% year-over-year rise in adjusted EBITDA and an 180 basis point improvement in margins. This financial performance was bolstered by internal automation and a disciplined approach to operating expenses, resulting in impressive gross profit margins of 85.8%. According to InvestingPro data, the company maintains strong financial health with an overall score of "GREAT."

The management team at Paycom highlighted strong new bookings during the quarter, indicating initial positive outcomes from the commercial reset initiated last year. However, despite these achievements, the company chose not to provide quarterly guidance. Management is projecting that recurring revenue growth will accelerate to around 10% by the end of 2025, building upon their current revenue growth of 11.19%. While the full-year forecast still trails behind peers, InvestingPro analysis suggests the stock is currently trading below its Fair Value, with 12 additional ProTips available for subscribers.

Paycom’s strategic moves, including product innovations such as Beti and GONE, along with its efforts to expand internationally, are expected to provide long-term benefits. Nevertheless, Stifel’s stance remains cautious in the near term. The firm cites a mix of factors for its caution, including inconsistent growth indicators, ongoing concerns about client retention, and a recovery in core unit expansion that is progressing more slowly than anticipated. These elements contribute to the cautious outlook despite the recent financial successes and strategic initiatives. With a market capitalization of $13.94B and a P/E ratio of 27.12, investors seeking deeper insights can access the comprehensive Pro Research Report available exclusively on InvestingPro.

In other recent news, Paycom Software has reported its first-quarter earnings for 2025, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $2.80, exceeding the forecasted $2.57, and reported revenue of $531 million, surpassing the anticipated $525.88 million. This robust performance has led to several analysts adjusting their price targets for the company’s shares. KeyBanc Capital Markets raised its price target to $270, citing strong sales and execution, while maintaining an Overweight rating. Piper Sandler also increased its target to $246, highlighting Paycom’s outperformance in revenue and EBITDA, and maintained a Neutral rating. Similarly, TD Cowen raised its price target to $241, noting the company’s solid financial results and sustained client growth, while keeping a Hold rating. The company has also updated its 2025 revenue and EBITDA guidance, maintaining a steady growth outlook. These developments reflect a positive sentiment among analysts and investors towards Paycom’s financial health and strategic direction.

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