TD Cowen raises Paycom Software stock price target to $250
Investing.com
Published Jun 04, 2025 10:26AM ET
On Wednesday, TD Cowen analysts raised the price target for Paycom (NYSE:PAYC) Software stock to $250 from $241, while maintaining a Hold rating. This adjustment follows a recent investor meeting with Paycom's CFO Bob Foster and Head of Investor Relations James Samford. The meeting highlighted key areas such as sales growth opportunities, AI initiatives, and retention strategies. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward, with price targets ranging from $203 to $310.
The analysts expressed increased confidence in Paycom's ability to meet its fiscal year 2025 guidance. They also noted the potential for higher attach rates within its existing customer base and improved retention rates, contributing to a positive outlook for the company. The company's impressive 85.89% gross profit margin and strong cash flows support this optimistic view. Want deeper insights? InvestingPro offers 15 additional exclusive tips about Paycom's performance.
Paycom stock has shown strong performance, with a 27% increase year-to-date and a 79% rise over the last year. This recent outperformance has led to a fair valuation, according to the analysts. Despite this, they are waiting for more assurance on sustaining sales momentum and the medium-term outlook for capital expenditures.
The new price target is based on a 29x EV/FCF estimate for the calendar year 2026, reflecting the analysts' expectations for Paycom's future growth and financial performance.
In other recent news, Paycom Software has reported a notable first-quarter performance, exceeding revenue forecasts by $5.5 million and margin estimates by $15.7 million. The company's recurring revenue surpassed $500 million for the first time, marking a significant milestone. Analysts from KeyBanc, Stifel, TD Cowen, and Piper Sandler have responded by raising their price targets for Paycom. KeyBanc increased its target to $285, citing improved sales strategies and customer retention, while Stifel adjusted its target to $215, acknowledging a modest top-line beat. TD Cowen raised its target to $241, highlighting strong trends and client acquisition, and Piper Sandler set a new target of $246, noting the company's organic sales growth and expense management. Paycom's strategic initiatives, including automation and international expansion, are viewed positively by analysts, although some remain cautious about the company's near-term growth. The firm's recent share repurchase program and updated 2025 growth targets have also drawn attention. These developments reflect Paycom's ongoing efforts to strengthen its market position and financial performance.
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