J.P. Morgan Raises Paychex PT From $28 To $32

J.P. Morgan is raising its PT (from $28 to $32) and estimates on Paychex, Inc. PAYX following F2Q11 results. Headline numbers were ahead of expectations with continued improvement in key payroll metrics. “Management increased FY11 guidance on positive improvements in metrics and a strong 1H, but noted surprises to their current view were unlikely and expect a tougher 2H due to investments and timing,” J.P. Morgan writes.” “We modify our FY11 Rev/EPS estimates from $2,070M/$1.39 to $2,075M/$1.42. We increase our FY11 payroll revenue growth from 1.0% to 1.5% (guidance of 1-2% growth) and our HR services revenue growth from 11.6% to 11.0% (guidance of 10-13% growth).” J.P. Morgan is also raising operating income excluding float growth from 4.4% to 6.6% on the 2Q margin upside, adding, “Our new EPS estimate of $1.42 (3.3% growth y/y) is on the low end of the implied EPS guidance of $1.42-$1.45 (previously “slightly up”).” Further, J.P. Morgan is tweaking its FY12 Rev/EPS from $2,220M/$1.50 to $2,223M/$1.50. Paychex currently trades at $31.13.