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Investing.com - TD Cowen reduced its price target on Paycom Software (NYSE:PAYC) to $246.00 from $254.00 on Thursday, while maintaining a Hold rating on the stock. According to InvestingPro data, the company maintains impressive gross profit margins of 86% and has demonstrated solid revenue growth of 10.2% over the last twelve months.
The price target adjustment follows what the research firm described as a "healthy revenue beat and raise" by the human capital management software provider.
Despite positive revenue performance, TD Cowen cited revised lower free cash flow estimates as a key factor in its decision to reduce the price target.
The firm also pointed to uncertainty regarding the outlook for capital expenditure spending as an additional concern weighing on its valuation model.
TD Cowen noted that Paycom’s "relative valuation versus competitors" remains an overhang for shares, potentially limiting upside potential despite the positive revenue developments.
In other recent news, Paycom Software reported its Q2 2025 earnings, surpassing market expectations with an earnings per share of $2.06, compared to the projected $1.78. The company’s revenue also exceeded forecasts, reaching $484 million against an anticipated $472.01 million. Following these results, several analyst firms adjusted their price targets for Paycom. KeyBanc Capital Markets raised its price target to $290, citing strong earnings performance and an increase in full-year guidance. BMO Capital also increased its price target to $258, highlighting the company’s better-than-expected second-quarter results and improved guidance. Stifel raised its price target to $240, noting a significant improvement in EBITDA margins, which grew 450 basis points year-over-year to 41%. These developments reflect a positive outlook from analysts on Paycom’s financial performance and strategic direction.
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