J.P. Morgan Previews F4Q11 On PAYX

J.P. Morgan is maintaining its Underweight rating and its $32 price target on Paychex PAYX as the company prepares to release its F4Q11 numbers tomorrow. Says J.P. Morgan, in its report, “PAYX plans to report F4Q11 (May) results after the close on June 22 with a call on June 23 at 10:30 AM EST. We expect the results to be generally in line with consensus where we have less confidence in revenue than EPS upside. FY12 guidance will be key and we expect a lackluster outlook as the firm re-tools for growth under new management - for FY12 we forecast revenue growth of 7.7% (6.7% organic; consensus at 5.3%) and EPS of $1.49 (5.0% growth; consensus at $1.51), implying a NTM P/E of 20x (4% dividend yield) which seems full considering an uneven macro outlook. While expectations seem low (PAYX stock down 9% vs. ADP down 4% since ADP reported C2Q earnings), we remain UW the stock as we see little room for EPS and multiple expansion in near-term.” PAYX closed yesterday at $29.97.