Oppenheimer Comments On PAYX's 3Q:FY11 Results

Paychex Inc. PAYX 3Q:FY11 EPS were in line with Oppenheimer's $0.36 estimate. “Adjusted margins increased 100bp Y/Y to 36.0% (vs. our 35.7% estimate) driven by continued tight cost controls and likely lower selling costs,” Oppenheimer writes. “Checks/client continue to improve, while net clients are down 1.6% Y/Y despite a 9% YTD decrease in client losses. “New sales were ‘close' to prior year, which is disappointing, in our view, given easy Y/Y comparisons and internal initiatives but likely remain depressed due to continued sluggish new business formation. PAYX's FY11 guidance remains largely unchanged, reflects slightly moderated HRS revenue expectations, and implied EPS of $1.40-1.43 are consistent with our/Street $1.42/$1.41 estimate.” Paychex closed Wednesday at $32.24.