Paychex, Inc. (NASDAQ:PAYX) Given Consensus Recommendation of "Reduce" by Brokerages

Key Points

• Brokerages have a consensus rating of "Reduce" on Paychex from 18 analysts (4 sell, 12 hold, 1 buy, 1 strong buy) with an average 12‑month price target of $108.75.
• Paychex beat quarterly expectations (EPS $1.71 vs. $1.67; revenue $1.81B vs. $1.78B), with revenue up 19.9% year‑over‑year and analysts projecting about $4.99 EPS for the current year.
• The company is returning capital via a $1.0 billion stock buyback authorization and a $4.32 annual dividend (yield ~4.8%), though its dividend payout ratio is elevated at ~95%.

Shares of Paychex, Inc. (NASDAQ:PAYX - Get Free Report) have been assigned an average rating of "Reduce" from the eighteen ratings firms that are presently covering the company, MarketBeat reports. Four research analysts have rated the stock with a sell recommendation, twelve have issued a hold recommendation, one has assigned a buy recommendation and one has issued a strong buy recommendation on the company. The average 12-month price objective among brokerages that have issued ratings on the stock in the last year is $108.75.

PAYX has been the subject of several analyst reports. JPMorgan Chase & Co. reduced their price objective on Paychex from $125.00 to $100.00 and set an "underweight" rating for the company in a research note on Thursday, March 26th. Argus raised Paychex to a "strong-buy" rating in a research note on Friday, March 27th. BMO Capital Markets upped their price objective on Paychex to $52.00 and gave the company an "outperform" rating in a research note on Thursday, March 26th. Wolfe Research reduced their price objective on Paychex from $130.00 to $115.00 and set an "underperform" rating for the company in a research note on Wednesday, December 10th. Finally, Wells Fargo & Company reduced their price objective on Paychex from $116.00 to $95.00 and set an "underweight" rating for the company in a research note on Thursday, March 26th.

Hedge Funds Weigh In On Paychex

Several institutional investors and hedge funds have recently added to or reduced their stakes in the business. FAS Wealth Partners Inc. increased its position in Paychex by 3.3% during the 2nd quarter. FAS Wealth Partners Inc. now owns 2,597 shares of the business services provider's stock worth $378,000 after purchasing an additional 83 shares during the period. Somerset Trust Co increased its position in Paychex by 0.3% during the 3rd quarter. Somerset Trust Co now owns 32,964 shares of the business services provider's stock worth $4,179,000 after purchasing an additional 84 shares during the period. Suncoast Equity Management increased its position in Paychex by 0.6% during the 3rd quarter. Suncoast Equity Management now owns 14,055 shares of the business services provider's stock worth $1,782,000 after purchasing an additional 85 shares during the period. 44 Wealth Management LLC increased its position in Paychex by 2.7% during the 2nd quarter. 44 Wealth Management LLC now owns 3,290 shares of the business services provider's stock worth $479,000 after purchasing an additional 86 shares during the period. Finally, Simon Quick Advisors LLC increased its position in Paychex by 1.5% during the 3rd quarter. Simon Quick Advisors LLC now owns 6,126 shares of the business services provider's stock worth $777,000 after purchasing an additional 89 shares during the period. Institutional investors and hedge funds own 83.47% of the company's stock.

Paychex Stock Down 1.9%

Paychex stock opened at $89.89 on Thursday. Paychex has a fifty-two week low of $86.89 and a fifty-two week high of $161.24. The company has a debt-to-equity ratio of 1.13, a quick ratio of 1.26 and a current ratio of 1.26. The company has a market capitalization of $32.21 billion, a P/E ratio of 19.80 and a beta of 0.88. The stock has a 50-day simple moving average of $94.24 and a 200-day simple moving average of $108.50.

Paychex (NASDAQ:PAYX - Get Free Report) last posted its quarterly earnings data on Wednesday, March 25th. The business services provider reported $1.71 EPS for the quarter, beating the consensus estimate of $1.67 by $0.04. The firm had revenue of $1.81 billion during the quarter, compared to the consensus estimate of $1.78 billion. Paychex had a return on equity of 48.52% and a net margin of 25.84%.The firm's revenue was up 19.9% compared to the same quarter last year. During the same period in the prior year, the business earned $1.49 EPS. Equities research analysts expect that Paychex will post 4.99 earnings per share for the current year.

Paychex Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Friday, February 27th. Shareholders of record on Wednesday, January 28th were paid a dividend of $1.08 per share. The ex-dividend date of this dividend was Wednesday, January 28th. This represents a $4.32 annualized dividend and a yield of 4.8%. Paychex's dividend payout ratio is currently 95.15%.

Paychex announced that its board has approved a stock buyback plan on Friday, January 16th that authorizes the company to buyback $1.00 billion in shares. This buyback authorization authorizes the business services provider to purchase up to 2.5% of its shares through open market purchases. Shares buyback plans are often an indication that the company's leadership believes its shares are undervalued.

About Paychex

Paychex, Inc, founded in 1971 by B. Thomas "Tom" Golisano and headquartered in Rochester, New York, is a provider of payroll, human resources, and benefits outsourcing solutions for small- and medium-sized businesses. The company's core services include payroll processing and tax filing, employee benefits administration, retirement services, and workers' compensation administration, designed to simplify back-office operations and help clients comply with regulatory and tax requirements.

Paychex offers an integrated technology platform, marketed under the Paychex Flex brand, which delivers cloud-based payroll, HR, time and attendance, and reporting tools.

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