- Analysts reiterated their ratings on Paycom Software, Inc (NYSE: 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 (SIX:CSGN) 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.
| Feb 2022 | Mizuho | Maintains | Neutral | |
| Feb 2022 | Needham | Maintains | Buy | |
| Feb 2022 | Piper Sandler | Maintains | Overweight |
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