Morgan Stanley Reports Paychex F3Q May Support Current Levels But Not Higher Ones

According to Morgan Stanley, Paychex PAYX F3Q may support current levels, but not higher ones. Morgan Stanley reported that, while F3Q was solid and generally in-line to slightly ahead of the Street, with shares trading at a 23x C11 P/E, it does not think there was enough in the results to push valuation or forward estimates higher. “The durability of the PAYX model and the “safety” of a high dividend has trumped the macro employment backdrop over the last 6 months, so we think that any incremental color on new or ongoing PAYX-specific initiatives could be a more meaningful driver of sentiment. Investors will be interested in an update about how recent changes to PAYX's product pricing and packaging impacted the key selling season, as well as a progress report on the recent sales restructuring initiative (we are hearing mixed reviews).” Paychex closed yesterday at $31.93.