Read How Analysts Reacted To Paycom Software's Q1 Results

  • Analysts reiterated their ratings on Paycom Software, Inc PAYC post Q1 results.
  • Needham analyst Ryan MacDonald reiterated the Buy rating and $450 price target on Paycom Software following the company's stellar start to FY22, in which revenue and adjusted EBITDA exceeded consensus expectations. 
  • PAYC put up a sizeable 1Q22 beat and raise driven by solid sales productivity that led to notable success in the 1,000+ employee segment of the market. 
  • Conversions of the existing customer base to BETI continued to trend well, with over 25% of the customer base has implemented the solution. 
  • MacDonald believes its combination of 100% domestic exposure, Rule of 65 economics, and ramping FCF margins warrant a premium valuation and position shares well for sustained outperformance in FY22 despite the challenging macro-environment.
  • Credit Suisse analyst Kevin McVeigh maintained Paycom Software with an Outperform and lowered the price target from $425 to $350.
  • McVeigh expects the PAYC stock to rally on the Q1 beat and 2022 raise. 
  • McVeigh remains bullish on its continued recurring revenue growth fueled by new business, which increased FY22 guidance. 
  • Despite interest- and geopolitical-fueled volatility, the PAYC stock appears poised to benefit from generational technology shifts in do-it-yourself [DIY] employee consumption. 
  • Innovative, cloud-native solutions such as Better Employee Transaction Interface [Beti] empower employees to do their payroll. 
  • Displacing inefficient solutions could fuel further retention, currently 94%, up from a low 90% several years ago. 
  • Price Action: PAYC shares closed higher by 14.3% at $329.61 on Wednesday.
Posted In: BriefsAnalyst ColorNewsPrice TargetReiterationAnalyst RatingsMoversTechTrading Ideas