TD Cowen Upgrades Paycor HCM Inc (PYCR) to Buy

TD Cowen analyst Bryan Bergin upgraded Paycor HCM Inc (NASDAQ: PYCR) from Hold to Buy with a price target of $22.00 (from $18.00).

The analyst comments "Our upgrade to Buy is spurred by PYCR's recent Investor Day (see takeaways note HERE), increasing our confidence in its ability to deliver mid-teens ex-float growth & materially narrow the gap in FCF margin versus peers over the medium-term, with our estimates and valuation multiple moving higher. PYCR has underperformed comps in 2024 (+27% L3M & -16% YTD vs. 36% & 19% for peers) as investors have overlooked shares due to its smaller market cap ($3Bn), lower trading volume, less attractive financial profile, and a perceived lack of differentiation from peers PCTY & PAYC. We believe its emerging embedded HCM business supports leading growth and increasing differentiation (vs. PCTY & PAYC), warranting multiple expansion. We also believe its ability to materially expand FCF margins over the medium-term (~60% forecasted FCF CAGR over FY24-27E), stemming from increasing sales efficiency, is not fully appreciated. We expect shares to outperform the comp set as it executes toward its med-term targets and investors begin to acknowledge the most attractive risk-reward within the SaaS HCM group and recognize its embedded HCM business as a differentiated growth avenue. This is a non-consensus call as PYCR shares are only ~50% Buy-rated, and the overwhelming majority of those Buy ratings have not changed from its 2021 IPO. We raise the price target to $22 based on 4.3x CY26E EV/S."

For an analyst ratings summary and ratings history on Paycor HCM Inc click here. For more ratings news on Paycor HCM Inc click here.

Shares of Paycor HCM Inc closed at $18.06 yesterday.

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