Mizuho Says ADP Ready To Grow, Sets Price Target At $210

Human capital management (HCM) solutions company Automatic Data Processing Inc ADP has a clear path to grow after Mizuho Securities analysts surveyed HCM executives.

The ADP Analyst: Dan Dolev initiated coverage of Automatic Data Processing's stock with a Buy rating and a $210 price target.

The ADP Thesis: Mizuho analysts surveyed more than 100 executives across SMBs (small and midsize businesses) to large enterprises to gauge the HCM market and the products workplaces are using, Dolev wrote in the note. The results make it clear the company emerged from a 2017 proxy battle with Bill Ackman's Pershing Square in a much better position.

ADP has gained or maintained market share across three of the four major categories it operates in. The three segments include tax services, talent and benefits, while payroll remains challenged.

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By segment, ADP gained a "considerable" market share in enterprise tax services products. The company's market share rose from the high 30% range five years ago to a mid-40% range today.

Similar to taxes, ADP's talent services market share rose from the high-teens five years ago to a mid-20% range today, the analyst wrote. The company's success in benefits is not as strong, but the company appears to have "staunched market share losses."

Finally, the company has seen share loss in payroll, but the survey encouragingly highlights areas of success, especially in other product categories.

ADP Price Action: Shares of ADP closed Thursday at $166.85.

(Photo by Fabian Irsara on Unsplash)