On Thursday, BMO Capital Markets adjusted its outlook on Paycor HCM Inc (NASDAQ:PYCR), a provider of human capital management software solutions. The firm lowered its price target on the company's stock to $20 from the previous $23, while maintaining a Market Perform rating.
The revision follows Paycor's third-quarter earnings, which revealed less growth than expected, particularly in annual form filing and Employee Retention Tax Credit (ERTC) revenues. The analyst at BMO Capital expressed concerns about the near-term prospects for the company amidst a challenging macroeconomic environment and recent changes within its sales organization aimed at addressing seller churn and maintaining productivity.
The analyst also noted that there are moderated expectations for growth reacceleration, especially with the fiscal year 2025 revenue guidance anticipated in August. Consequently, the firm has reduced its forecast for FY25 recurring growth to approximately 14.5-15% year-over-year.
This revised growth outlook has also prompted BMO Capital to trim its valuation framework for Paycor, resulting in the lower stock price target of $20. The adjustment reflects concerns over the slower anticipated growth rate as the company continues to navigate through the current economic landscape and internal organizational changes.
InvestingPro Insights
As Paycor HCM Inc (NASDAQ:PYCR) navigates through a challenging period, insights from InvestingPro provide a deeper understanding of the company's financial health and market position. Notably, Paycor holds more cash than debt on its balance sheet, which could be a sign of financial stability. Additionally, analysts predict the company will be profitable this year, aligning with expectations of net income growth.
InvestingPro Data underscores Paycor's strong gross profit margins, which stood at an impressive 66.09% for the last twelve months as of Q3 2024. Despite trading near its 52-week low, the company's revenue growth remains robust at 20.35% over the same period. Still, it is important to note that Paycor is currently trading at high EBITDA and revenue valuation multiples, reflecting a premium market valuation.
To gain further insights and access additional InvestingPro Tips for Paycor, including its potential for reacceleration in growth and internal organizational changes, readers can explore the dedicated section on Investing.com. There are 6 more InvestingPro Tips available to help investors make informed decisions. For those interested in a comprehensive analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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