Paycor's Cloud Strength Vs. Macroeconomic Challenges: Analysts Find Common Ground In Price Target Reductions Following Q4 Results

Many analysts cut the price target of Paycor HCM Inc PYCR following its Q4 FY23 results reported yesterday.

Adjusted EPS of $0.08 beat the $0.06 estimate, and sales of $140.00 million exceeded the consensus of $136.55 million.

The company expects revenues of $138 million - $140 million (vs. $142.28 million consensus) for Q1 and $644 million- $650 million (vs. consensus: $647.16 million) for FY24.

BMO Capital Markets analyst Daniel Jester reduced the price target to $24 from $27 and maintained a Market Perform rating.

The analyst sees the buy-side expectations dropping following Paylocity’s results and believes a back-half core growth acceleration is difficult to achieve amid the present macro environment. 

Jester also expects sales investments to take time to mature, and comps are likely to toughen into a challenging macro environment.

The analyst revised the FY24 revenue estimate to $649 million from $646 million and EPS to $0.44 from $0.43.

JMP Securities analyst Patrick Walravens cut the price target to $32 from $42 while maintaining the Market Outperform rating.  

The analyst sees headwinds from weakening labor market growth but expects long-term growth potential on a differentiated cloud-based HCM suite, an opportunity to boost sales coverage, and an experienced leadership team.

The analyst lowered FY24 adjusted EPS estimate to $0.40 from $0.43 (consensus $0.43) on revenue of $648.5 million (+17% y/y) due to expected higher interest income expenses while increasing FY25 adjusted EPS estimate to $0.54 from $0.52 (consensus $0.53) on revenue of $756.9 million (+17% y/y).  

Also, reiterating a Neutral rating, JP Morgan lowered the price target to $23 from $26, DA Davidson to $22 from $24, Citigroup to $26 from $28, and Mizuho to $22 from $24.

Price Action: PYCR shares are trading lower by 5.55% at $21.60 on the last check Thursday,