The primary challenge in Paychex Inc.'s (NASDAQ:PAYX) latest results and guidance is reconciling the fiscal fourth quarter's 3% year-on-year organic revenue growth with the 5% guidance for fiscal 2026, according to Stifel.
The Paychex Analyst: Analyst David Grossman maintained a Hold rating, while reducing the price target from $156 to $152.
The Paychex Thesis: The company reported its fiscal fourth-quarter revenue at around $11 million, short of the midpoint of its guidance, "which management attributed to one week delay in closing PYCR acquisition," Grossman said in the note.
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Paychex's Management Solutions, which accounts for 73% of total revenues, generated organic growth of 3%, which is comparable to the previous quarter's growth but below the 5% guidance announced for fiscal 2026, he added.
Management indicated that the timing of price hikes in the fiscal fourth quarter of the previous year was more favorable, creating a difficult comparison, the analyst stated.
"Normalizing for this pricing dynamic, F4Q organic management solutions growth was ~5%," he further wrote.
PAYX Price Action: Shares of Paychex had risen by 0.95% to $139.25 at the time of publication on Thursday.
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