Paycom Software (PAYC) PT Raised to $500 at Jefferies After Growth Returns to 30%
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Jefferies analyst Samad Samana raised the price target on Paycom Software (NYSE: PAYC) to $500.00 (from $470.00) after sub rev (+34% y/y) and EBITDA both beat consensus, with the sub rev beat % vs. consensus, one of the biggest of the last several years. Management noted a combination of strong new bookings and a modest improvement in employment that resulted in the upside. BETI is also off to a promising start with >1K customers already adopting it. The 3Q and FY21 guidance also beat consensus.
The analyst reiterated a Buy rating, seeing BETI as an important development for the company. He stated "BETI had very little impact on 2Q results, however we see this as a potential tailwind to net retention 2H21 and 2022." He went on to note "BETI was officially rolled out to the market on 7/6 and >1,000 new and existing clients have already adopted the solution. Mgmt expects all clients to eventually adopt BETI resulting in a 3-4 quarter boost to the cross-selling motion as they move clients onto the platform. Mgmt previously stated it would take ~18 months to fully convert clients onto BETI and is three months into that timeline. Unlike some of PAYC's prior HCM upgrades (DDX and Manager-On-The-Go), PAYC is charging for BETI on a PEPM basis."
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