INVESTMENT CONCLUSION:
We maintain our NEUTRAL rating on Paychex following better than forecast first
quarter results. Paychex lacks a immediate catalyst as new business formation remains
muted and margins are held back by investments. There is the potential that the
company loses market share to technology based vendors over the longer term, but we
have yet to see clear cut evidence supporting this thesis. The multiple for the stock is
expensive given its earnings growth profile, but is supported by a healthy dividend and
recurring revenue base making it unlikely there will be a short term contraction.
For more information, please contact:
Joseph D. Foresi
617-557-2972
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].