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In a report published Wednesday, Credit Suisse analyst Georgios Mihalos downgraded the rating on
Automatic Data ProcessingADP from Outperform to Neutral, but reiterated the $82.00 price target.
In the report, Credit Suisse noted, “We are downgrading ADP to Neutral from Outperform solely on valuation. Shares of ADP are trading near record 10 year highs (26.2x vs. 18x average NTM P/E – see Exhibit 1) and above our fair value price of $82. We continue to believe that ADP is poised to post accelerating revenue and adj. EPS growth over the next 2 years and we are comfortable with our above consensus estimates. However, at current levels we think the upside is largely priced in. We note that ADP's current market cap of $40B is now slightly above the company's pre-CDK spin valuation. We remain big fans of the company, but look for a more attractive entry point.”
Automatic Data Processing closed on Tuesday at $82.54.
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