Janney Montgomery Scott Downgrades Paychex (PAYX) to Sell; Expectations High; Risk/Reward to the Downside; Favors ADP
PAYX Hot Sheet
Rating Summary:0 Buy, 6 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Janney Montgomery Scott downgrades Paychex (Nasdaq: PAYX) from Neutral to Sell. $25 price target.
Janney analyst says, "Recent stock price appreciation has created a 20% downward opportunity to our fair value estimate. Though we agree with the thesis to invest in Paychex before/into an employment/economic recovery, we believe expectations have become too high, pricing out the best of scenarios. We would look to upgrade our rating on stock pull-backs, leveling of expectations, and faster- than anticipated economic recovery... We also like an Automatic Data Processing (NYSE: ADP) long/PAYX short pair. Though we rate ADP Neutral, we believe the valuation discrepancy between the two names creates a compelling long/short pair at current levels, with ADP trading at 15.1x earnings vs. Paychex' 18.9x, 13.3x EV/FCF vs. Paychex's 18.0x, and 2.1x revenue vs. Paychex' 5.0x. We would look to upgrade our rating on a stock pull-back, leveling of expectations, and faster-than anticipated economic recovery."
To see all the upgrades/downgrades on shares of PAYX, visit our Analyst Ratings page.
Paychex, Inc. is a provider of payroll, human resource and benefits outsourcing solutions for small to medium-sized businesses.
Janney analyst says, "Recent stock price appreciation has created a 20% downward opportunity to our fair value estimate. Though we agree with the thesis to invest in Paychex before/into an employment/economic recovery, we believe expectations have become too high, pricing out the best of scenarios. We would look to upgrade our rating on stock pull-backs, leveling of expectations, and faster- than anticipated economic recovery... We also like an Automatic Data Processing (NYSE: ADP) long/PAYX short pair. Though we rate ADP Neutral, we believe the valuation discrepancy between the two names creates a compelling long/short pair at current levels, with ADP trading at 15.1x earnings vs. Paychex' 18.9x, 13.3x EV/FCF vs. Paychex's 18.0x, and 2.1x revenue vs. Paychex' 5.0x. We would look to upgrade our rating on a stock pull-back, leveling of expectations, and faster-than anticipated economic recovery."
To see all the upgrades/downgrades on shares of PAYX, visit our Analyst Ratings page.
Paychex, Inc. is a provider of payroll, human resource and benefits outsourcing solutions for small to medium-sized businesses.
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