J.P. Morgan Reports Paychex Estimates Largely Unchanged

According to J.P. Morgan, Paychex PAYX estimates are largely unchanged. J.P. Morgan reported that it is making minor adjustments to its PAYX estimates following F3Q11 results. “Although there was a slight beat in Rev/EPS, expectations for a seasonally weak 4Q, slowing metrics improvement and lack of guidance raise weighed negatively on the stock. Management made preliminary comments on FY12, with expectations for growth in the company's client base and payroll services revenue, offset by declining float income. We continue to prefer Neutral-rated ADP over PAYX as we see higher growth at ADP in the mid- term. PAYX trades at 22x our CY11 estimates vs. ADP at 19x (representing a 17% premium vs. consensus LTM average premium of 17%). We reiterate our Dec 2011 PT of $32.” Paychex closed yesterday at $30.96.