How Analysts Now View Paychex

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Paychex Inc. (NASDAQ: PAYX) released its fiscal third-quarter financial results before the markets opened on Monday. Overall, the earnings report was underwhelming for investors. And analysts seemed to take a clue from the response and cut their price targets across the board.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about the firm following the earnings report.

The company said that it had $0.63 in earnings per share (EPS) on $866.5 million in revenue, which compares with consensus estimates from Thomson Reuters of $0.63 in EPS on revenue of $854.5 million. In the same period of last year, Paychex said it had EPS of $0.55 and $795.8 million in revenue.

During the most recent quarter, payroll service revenue was $455.0 million, a 2% increase compared to the same period of last year. The increase was driven primarily by growth in revenue per check, which improved as a result of price increases, net of discounts.

Human Resource Services revenue increased 17% to $393.4 million for the third quarter. This revenue growth was primarily driven by increases in client bases across the following human capital management services: comprehensive human resource outsourcing services, including HROI; retirement services; time and attendance; and insurance services.

In terms of the outlook for the fiscal 2018 year, EPS is expected to grow in the range of 15% to 16% year over year, while total revenues are expected to grow roughly 7%. The consensus estimates are $2.48 in EPS on $3.36 billion in revenue for the full year.

Here’s what analysts had to say after the report:

  • Barclays lowered its price target to $70 from $75‍.
  • BMO Capital Markets has a Market Perform rating and lowered its target to $63 from $70.
  • Evercore ISI lowered its price target from $74 to $69.
  • JPMorgan lowered its price target to $65 from $69.
  • Morgan Stanley maintained an Equal Weight rating and lowered its target to $66 from $68.
  • RBC Capital Markets maintained it as Underperform and lowered its target from $65 to $63.
  • Stifel maintained a Hold rating and lowered its price target to $66 from $68.

Shares of Paychex were last seen trading at $60.87, with a consensus analyst price target of $67.68 and a 52-week range of $54.20 to $73.10.

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