UPDATE: Citigroup Downgrades Automatic Data Processing to Neutral, Raises PT to $60

Citigroup lowers its rating on Automatic Data Processing (NASDAQ: ADP) to Neutral from Buy with a primarily valuation-related rationale. As such, it bumps its price target up $2 to $60 a share.

Citigroup says, "Valuation is a key part of our downgrade rationale but not the only reason. ADP's operating metrics have improved steadily and, in our view, the rate of improvement in factors like pays/control and client retention may have peaked. One of the two areas that have not improved yet is large business sales growth (particularly non-US) and that is typically accompanied with margin pressure – the other area is interest rates and that environment is unlikely to improve until 2014. In other words, prospects for a continued upside to expectations seem rather limited."

ADP closed at $56.92 a share on Wednesday.