KeyBanc analyst Jason Celino has increased the price target for Paycom (PAYC, Financial) from $270 to $285, maintaining an Overweight rating on the stock. This decision follows investor meetings with Paycom's CFO Bob Foster and IR James Samford, where discussions highlighted the company's strong recent bookings. The increase in bookings is largely due to enhanced execution, boosting confidence in Paycom's potential recurring growth in the fourth quarter.
Meetings also focused on Paycom's internal efficiencies, particularly advancements in sales and marketing strategies, including targeted advertisements and customer service. These improvements have positively impacted the company's profit margins, which KeyBanc views favorably. Overall, KeyBanc expresses greater confidence in Paycom's continued operational progress.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 14 analysts, the average target price for Paycom Software Inc (PAYC, Financial) is $240.14 with a high estimate of $285.00 and a low estimate of $211.00. The average target implies an downside of 4.97% from the current price of $252.70. More detailed estimate data can be found on the Paycom Software Inc (PAYC) Forecast page.
Based on the consensus recommendation from 20 brokerage firms, Paycom Software Inc's (PAYC, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Paycom Software Inc (PAYC, Financial) in one year is $275.78, suggesting a upside of 9.13% from the current price of $252.7. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Paycom Software Inc (PAYC) Summary page.
PAYC Key Business Developments
Release Date: May 07, 2025
- Total Revenue: $531 million, a 6% increase year-over-year.
- Recurring and Other Revenue: $500 million, up 7% year-over-year.
- Interest on Funds Held for Clients: $31 million, a 10% decline year-over-year.
- GAAP Net Income: $139 million or $2.48 per diluted share.
- Non-GAAP Net Income: $158 million or $2.80 per diluted share.
- Adjusted EBITDA: $253 million, a 10% increase year-over-year, with a 48% margin.
- Cash and Cash Equivalents: $521 million with no debt.
- Funds Held for Clients: Average daily balance of $2.9 billion.
- Cash Dividends Paid: $21 million in the first quarter.
- Stock Repurchase: $5 million of common stock repurchased; $1.47 billion remaining under repurchase plan.
- Full-Year Revenue Guidance: Expected between $2.023 billion and $2.038 billion, up approximately 8% year-over-year.
- Full-Year Adjusted EBITDA Guidance: Expected between $843 million and $858 million, with a margin expansion to approximately 42%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Paycom Software Inc (PAYC, Financial) reported a 6% increase in total revenue for the first quarter of 2025, reaching $531 million.
- The company's Net Promoter Score increased by 16 points year-over-year, indicating improved customer satisfaction.
- Paycom's automation solutions, such as GONE and Beti, are delivering significant ROI for clients, with GONE achieving up to 800% ROI according to a Forrester study.
- The company successfully onboarded new clients, including a 2,500-employee restaurant group, highlighting strong sales performance.
- Paycom Software Inc (PAYC) has a strong balance sheet with $521 million in cash and no debt, supporting its financial stability and growth potential.
Negative Points
- Interest on funds held for clients declined by 10% year-over-year, representing a headwind for Paycom Software Inc (PAYC).
- The company faces potential risks from macroeconomic factors such as tariffs and employment trends, which could impact client businesses and, consequently, Paycom.
- Despite strong revenue growth, the company experienced a 12% year-over-year decline in expected interest on funds held for clients for the full year 2025.
- Paycom Software Inc (PAYC) anticipates a decrease in free cash flow due to ongoing investments in AI and technological assets.
- The company is experiencing some seasonality in its revenue, with Q1 forms business not growing at the same rate as other segments.
