Paychex: Can the financial stock still rise to $130?

Last Updated: 18. Januar 2024By

Paychex may not be as well-known as Paypal. However, behind Paychex is a leading company in the USA that offers comprehensive financial and personnel services. The portfolio includes a variety of services, including payroll services and comprehensive personnel services. Paychex focuses particularly on the needs of over 570,000 small businesses and medium-sized enterprises in the USA. Now, the new quarterly figures are available. Should you invest in this financial stock?

Revenue growth falls short of expectations For the second quarter, the company reported a revenue of 1.26 billion US$, compared to 1.19 billion US$ in the previous year, falling short of the average analyst estimate of 1.27 billion US$. Net profit amounted to 392.7 million US$ compared to 360.3 million US$ a year ago.

Environment remains stable „The macroeconomic environment remains stable for small and medium-sized enterprises, which continue to face challenges in terms of costs and access to growth capital, and must find high-quality talent in the current labor market,“ said Chief Executive John Gibson.

Forecast for fiscal year 2024 slightly raised For fiscal year 2024, the company now expects a profit growth of between 10% and 11%, which is an increase from the lower end of the forecast of 9% given in September. In the first half of the year, adjusted earnings per share increased by 10%. Annual revenue growth is still estimated at 6% to 7%.

Can the financial stock still rise to 130 US$? Conclusion: The current difficult market environment can also be seen in the stock price. In the calendar year 2023, the stock has not moved at all, but there have been significant fluctuations in between. The sentiment among analysts is also not good. Not a single analyst recommends buying the stock. 17 out of 21 analysts recommend holding and 4 analysts want to sell. The average analyst price target of 121 US$ has already been exceeded. And even with the highest analyst price target of 130 US$, there is no enthusiasm. With a P/E ratio of over 25, the financial stock is already highly valued. And you can get a dividend yield of almost 3% elsewhere.