Deutsche Bank Has Hold On Paychex (PAYX)

Deutsche Bank has a Hold rating and a $27 price target on shares of Paychex PAYX. In a note to clients, Deutsche Bank writes, "Paychex reported FY3Q11 revs of $531mm (+5% YoY), edging us by $7mm on slight upside across the board: Payroll revs (+2% YoY vs. our +1%), HRS revs (+13% vs. our +11%) and float income (+$1mm). EPS of $0.36 were a penny ahead of us/Street due to the revs upside and leaner operating costs than we had modeled. While overall FY11 guidance is unchanged, implied 4Q outlook--which now includes (~$6mm) SurePayroll revs--appears light, with PAYX lowering the high end of its annual HRS revs outlook (from +13% to +11%) due to volatility in PEO. We will wait until Thurs morning's conference call to update our model, as we think that color around sales trends during PAYX's key selling season (Dec/Jan) is most crucial for estimating FY2012 growth potential." Shares of PAYX gained 32 cents yesterday to close at $32.24, a gain of 1%.