UPDATE: Goldman Sachs Upgrades Automatic Data Processing to Buy on Cyclical Positioning

Goldman Sachs raised its rating on Automatic Data Processing

from Neutral to Buy and raised its price target from $53 to $68. Goldman Sachs noted, "We upgrade ADP to Buy... given of the following factors. (1) Stronger cycle-to-cycle earnings power. We estimate the underlying organic growth from cycle to cycle will exceed 60%, net of the float headwinds, driven by product innovation leading to market share gains. (2) Superior capital allocation. On average over the past five years, ADP has used more than 90% of its FCF on share repurchases and dividends. Total capital return, dividends plus accretive buybacks, accumulates to 24%. (3) Defensive characteristics. ADP has a high visibility/SaaS model with 90% revenue retention which keeps revenue stable during downturns. During upturns, rising interest rates augment benefits of rising employment." Automatic Data Processing closed at $58.90 on Thursday.