Paychex is likely to rebound as investors see signs of growth in the stock and hope to benefit from recent dividend increases, Citi said. The bank upgraded the fintech stock to buy from neutral. They also raised their price target to $140 from $99, which would represent a 39% upside from Friday’s closing price. “Industry insights show that AI solutions are driving improved customer retention, new pricing opportunities, and lower shipping costs for PAYX. Meanwhile, the macro environment (which, contrary to perception, is not the primary driver) “Increasing and steadily declining bankruptcy rates (employment and floating income (3% of total sales) have virtually zero impact on sales growth) are providing a slight tailwind,” analyst Brian Keene said in a note to clients on Sunday. Paychex has fallen 34% in the past 12 months as concerns about operating costs and the health of the broader labor market weighed on the stock. PAYX 1Y Mountain’s share price has fallen 34% over the past 12 months. However, Citi believes Paychex is likely to show strong signs of growth and an improved full-year financial outlook when it releases its results later this month. “Led by the recent surge in bookings…we expect PAYX organic revenue growth to accelerate in FY27 (reversing four-year trend),” Keene wrote. The analyst added that Paychex’s recent dividend increases have limited the downside, allowing the company’s stock to remain “attractive to investors, although valuations remain well below historical levels.” On May 1, Paychex increased its dividend by 11 cents, or 10%, to $1.19 per share. The City’s call goes against the consensus on the street. Of the 19 analysts covering Paychex, 14 own the stock, according to LSEG data.
