Citi Assumes Paychex (PAYX), Upgrades to Buy

Citi analyst Peter Christiansen assumes coverage on Paychex (NASDAQ: PAYX) with a Buy rating (from Neutral) and a price target of $185.00 (from $170.00).

The analyst comments "Generally, we take a positive view on the “traditional” payroll / HCM providers. We assume a positive economic environment including rising wages (24 states with minimum wage increases) and a moderating, albeit solid U.S. jobs growth on improving labor participation for 2020. Payroll / HCM solutions businesses will see moderating unit growth; however, mitigate the deceleration via a continuation of strong retention trends, stable pricing, and rising attached services sales. While margin trajectories are rising gradually, they are likely to be obfuscated by zero-margin pass-thrus, compounded by an increasing mix of PEO revenue. Along with HSD-LDD earnings growth Investors should continue to see improving ROIC/ROE providing modest multiple appreciation from here."

For an analyst ratings summary and ratings history on Paychex click here. For more ratings news on Paychex click here.

Shares of Paychex closed at $86.26 yesterday.

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