How Analysts Now View Paychex

By Chris Lange Updated Jan 12, 2:01AM EST · Published Mar 27, 11:25AM EDT

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How Analysts Now View Paychex — © mikolajn / iStock

Paychex Inc. (NASDAQ: PAYX) released its fiscal third-quarter financial results before the markets opened on Monday. Overall, the earnings report was underwhelming for investors. And analysts seemed to take a clue from the response and cut their price targets across the board.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about the firm following the earnings report.

The company said that it had $0.63 in earnings per share (EPS) on $866.5 million in revenue, which compares with consensus estimates from Thomson Reuters of $0.63 in EPS on revenue of $854.5 million. In the same period of last year, Paychex said it had EPS of $0.55 and $795.8 million in revenue.

During the most recent quarter, payroll service revenue was $455.0 million, a 2% increase compared to the same period of last year. The increase was driven primarily by growth in revenue per check, which improved as a result of price increases, net of discounts.

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Human Resource Services revenue increased 17% to $393.4 million for the third quarter. This revenue growth was primarily driven by increases in client bases across the following human capital management services: comprehensive human resource outsourcing services, including HROI; retirement services; time and attendance; and insurance services.

In terms of the outlook for the fiscal 2018 year, EPS is expected to grow in the range of 15% to 16% year over year, while total revenues are expected to grow roughly 7%. The consensus estimates are $2.48 in EPS on $3.36 billion in revenue for the full year.

Here’s what analysts had to say after the report:

Barclays lowered its price target to $70 from $75‍.
BMO Capital Markets has a Market Perform rating and lowered its target to $63 from $70.
Evercore ISI lowered its price target from $74 to $69.
JPMorgan lowered its price target to $65 from $69.
Morgan Stanley maintained an Equal Weight rating and lowered its target to $66 from $68.
RBC Capital Markets maintained it as Underperform and lowered its target from $65 to $63.
Stifel maintained a Hold rating and lowered its price target to $66 from $68.

Shares of Paychex were last seen trading at $60.87, with a consensus analyst price target of $67.68 and a 52-week range of $54.20 to $73.10.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.