Tuesday, 23 April 2024

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Morgan Stanley lowers Paychex share price target amid ERTC impact and SMB trends By Investing.com

This cybersecurity stock could double in value within next 3-4 years - Morgan Stanley

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On Wednesday, Morgan Stanley adjusted its outlook on Paychex (NASDAQ:), a leading provider of payroll, human resource, and benefits outsourcing services. The firm lowered its share price target on the NASDAQ-listed company to $125 from the previous $127 while maintaining an Equalweight rating on the stock.

The price target revision comes amid expectations of a near-term drag on earnings due to the Employee Retention Tax Credit (ERTC). Despite the anticipated impact on near-term estimates, the analyst noted that positive macroeconomic commentary, especially regarding small and medium business (SMB) closure rates, has contributed to an intra-day recovery of Paychex’s share price.

The analyst emphasized the importance of Paychex’s execution against its fiscal year 2025 targets, excluding ERTC, as a key factor for the company’s performance. The firm acknowledges the challenges Paychex faces with slightly lower price realization but appears to see a path to acceleration in the coming years.

Paychex’s ability to navigate the post-ERTC landscape while capitalizing on the constructive macro trends will be crucial for its future growth trajectory. The updated price target reflects the balance of these factors as the company continues to execute its strategic plan.

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