We maintain our NEUTRAL rating on Paychex as we look for a catalyst to drive results in the face of a slow economic demand backdrop, the emergence of the SaaS based model, and low interest rates environment. The good news is the selling season went well and we could be near the bottom on the interest rate front. However, we view client additions, which remain challenged, as a crucial catalyst for growth, but give management credit for partially offsetting the lack of client growth with increased sales productivity and revenue per client. The risk/reward remains challenged at present levels given the earning growth projections.
For more information, please contact:
Joseph D. Foresi