UPDATE: Morgan Stanley Raises PT to $35 on Paychex on Organic Growth Outlook

Morgan Stanley reiterated its Neutral rating on Paychex

but raised its price target from $32 to $35. Morgan Stanley commented, "We are positive on the payroll processing sector but see less upside for PAYX due to (1) weaker cycle to cycle earnings improvement, (2) less-attractive capital allocation, and (3) slow recovery for SMB clients coming out of the downturn. … Our estimates are unchanged from our previous publishing but we increase our multiple from 19.5X as our organic growth analysis still shows nearly 20pp improvement over the previous employment cycle" Paychex closed at $33.37 on Thursday.