Dayforce secures lower interest rates on loans

Dayforce, Inc. (NYSE:DAY), a prepackaged software services company with a market capitalization of $10.6 billion and annual revenue of $1.76 billion, has successfully amended its credit agreement, leading to reduced interest rates on its term and revolving loans, as disclosed in a recent SEC filing.

The Minneapolis-based firm, previously known as Ceridian HCM Holding Inc ., entered into this new financial arrangement on Thursday. According to InvestingPro analysis, the company operates with a moderate level of debt, with several additional insights available to subscribers.

The amendment, facilitated by JPMorgan Chase (NYSE:JPM) Bank, N.A. as the administrative and collateral agent, introduced a new senior secured term loan facility. This facility refinanced existing term loans, resulting in a drop in the interest rate margin from 2.50% to 2.00% per annum for loans tied to the secured overnight financing rate (SOFR).

Similarly, alternate base rate loans saw a decrease from 1.50% to 1.00% per annum. The company maintains a healthy debt profile with a debt-to-equity ratio of 0.48 and a current ratio of 1.13.

Revolving loans under the amended credit agreement also benefit from a 25 basis point margin reduction. Depending on the company's consolidated first lien leverage ratio, SOFR-based loans will now range from 2.00% to 2.50% per annum, and alternate base rate loans will range from 1.00% to 1.50% per annum.

InvestingPro data reveals impressive gross profit margins of 50.71% and projects net income growth for the current year. For a complete analysis of Dayforce's financial health and future prospects, including exclusive ProTips and detailed valuation metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Dayforce has been the subject of several analyst adjustments following its fourth-quarter results. BMO Capital Markets, led by analyst Daniel Jester, revised the price target for Dayforce down to $83, but maintained an Outperform rating. Despite a potential slowdown, Jester underscored the company's robust bookings growth, approximately double that of revenue.

Scotiabank (TSX:BNS)'s Allan Verkhovski also adjusted his price target for Dayforce, reducing it to $72, while keeping a Sector Perform rating. He noted the company's miss in its DRREFCC, with revenues of $308.7 million, a 20.4% increase year-over-year, yet $3.4 million below guidance. Despite this, management expressed increased confidence in reaching their 20% free cash flow (FCF) margin target.

Stifel analysts reduced their price target from $90 to $85 but continued to recommend the stock as a Buy. They noted the company's total revenue for the fourth quarter exceeded expectations and improved profitability measures. S&P Global Ratings affirmed Dayforce's 'BB-' issuer credit rating, revised the outlook to positive from stable, and expects strong recurring cloud revenue growth to back solid credit metrics over the next 12 to 18 months.

Lastly, JPMorgan analyst Mark Murphy adjusted the price target for Dayforce to $68 while maintaining a Neutral rating. Despite a quarterly beat attributed more to float revenue and non-recurring businesses, Dayforce's recurring revenue, excluding float, missed targets. However, the company expressed confidence that its sales momentum would continue into the first quarter and throughout 2025.

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