Jefferies analyst Samad Samana maintained a Hold rating on Paycom (PAYC – Research Report) yesterday and set a price target of $195.00.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding Paycom Software Inc’s recent financial performance and future projections. The fourth quarter results were more favorable than anticipated, surpassing the lowered expectations from the previous quarter. However, the growth in recurring revenue has shown signs of deceleration, marked by a 17% year-over-year increase. There are also concerns regarding a slight decrease in client retention and a modest 5% growth in seat additions for the year 2023, which indicate that Paycom may be experiencing some challenges in its business environment.
Moreover, the revenue outlook for 2024 aligns with predictions, but the guidance for EBITDA points to a concerning decline of approximately 400 basis points year-over-year. This suggests that Paycom could be facing a period of slowed growth and margin contraction. With these financial headwinds, the expectation is that Paycom’s stock may not garner much favor with investors until there is evidence of fundamental stabilization within the company. Therefore, the Hold rating reflects a cautious approach, acknowledging the company’s current financial resilience while also recognizing the potential difficulties it may face in the near future.
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Paycom (PAYC) Company Description:
Incorporated in 1998, Oklahoma-based Paycom Software, Inc. provides cloud-based human capital management (HCM) software services for small to mid-sized companies in the United States.
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