Barclays Reiterates an 'Equalweight' on Paychex (PAYX); Takeaways from 1Q Conference Call

Barclays reiterates an 'Equalweight' on Paychex (NASDAQ: PAYX) price target of $30.00.

Barclays analyst says, "PAYX has an attractive business model with strong margins/ROIC/cash flow, an overcapitalized balance sheet, and a ~4.7% dividend yield that we believe warrants a premium valuation. But at a 50%+ premium vs. the market and with limited near-term growth prospects, we find it fully valued at 18.1x/17.0x our CY'11-'12 EPS estimates."

"We believe that a stronger employment recovery and/or rising interest rates are necessary to return PAYX to consistent double-digit earnings and cash flow growth, which we believe would be necessary to justify valuation upside. With our expectation for a modest employment recovery and no Fed Funds interest rate increases until 2013, we do not expect consistent double-digit growth to emerge until 2H'13 or FY'14."

For more ratings news on Paychex click here and for the rating history of Paychex click here.

Shares of Paychex closed at $26.92 yesterday.

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