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On Thursday, Paychex Inc (NASDAQ:PAYX) saw its stock price target increased to $126.00 from $121.00 by TD Cowen, while the firm maintained a Hold rating on the stock. The adjustment comes in anticipation of the company's first-quarter results which are expected to surpass Wall Street's expectations and reaffirmation of its fiscal year 2025 guidance.
The analyst from TD Cowen noted that despite the positive outlook for the first-quarter results, there is a need for some caution due to potential comments on slowing small and medium-sized business (SMB) employment and a lower interest rate perspective.
The consensus estimates are slightly below the midpoint, indicating some market participants expect potential downside risks to the fiscal year 2025 guidance. Moreover, there has been a slight increase in short interest in the stock.
Despite these concerns, Paychex shares have recently performed well, outpacing the broader market rotation. This performance has brought the company's valuation in line with its approximately two-year average. The analyst's comments suggest that while there are factors that require vigilance, the company's recent market performance has been strong.
The updated stock price target reflects a balance between the anticipated positive first-quarter results and the cautious stance on the employment and interest rate outlook for SMBs. Paychex Inc will continue to be monitored by investors as it approaches its next earnings release, with the revised price target representing the latest analyst expectations for the stock's performance.
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