On Thursday, Mizuho Securities adjusted its outlook on Paycor HCM Inc (NASDAQ:PYCR), a provider of human capital management software solutions. The firm's analyst revised the price target downward to $19.00 from the previous $22.00 while maintaining a neutral stance on the shares.
This change follows Paycor's fiscal third-quarter earnings report, which indicated revenue slightly above expectations, primarily due to float income. However, this was tempered by a decline in recurring revenue.
The company also revised its full-year 2024 guidance downwards, attributing the adjustment to slower-than-anticipated Employee Retention Tax Credit (ERTC) uptake and sluggishness in the lower end of the market. Despite these challenges, Paycor is reportedly seeing incremental growth from its Embedded solution, a broad broker network, and recent changes in sales structure and territories.
The analyst noted that while Paycor is expanding its sales team, there could be a delay before sales efficiency sees improvement due to the time it takes for new sales personnel to become fully productive. The firm also expressed concerns about potential macroeconomic deterioration in the near term, referencing indications of weakness in the small and medium-sized business (SMB) sector from peers and other sources.
The adjustment to the price target reflects these factors, as well as the anticipation of a period before the expanded sales force can contribute effectively to Paycor's growth. The maintained neutral rating suggests that the firm advises caution with respect to the stock, given the current business environment and internal challenges faced by Paycor.
InvestingPro Insights
In light of Mizuho Securities' recent assessment of Paycor HCM Inc (NASDAQ:PYCR), current data from InvestingPro provides additional context for investors considering the stock. Paycor holds more cash than debt on its balance sheet, which could offer some financial flexibility in navigating the current business environment. Additionally, analysts expect net income to grow this year, aligning with the company's focus on expanding its sales force and product offerings.
From a valuation standpoint, Paycor is currently trading near its 52-week low, which may appeal to value-oriented investors. The company's gross profit margin stands at an impressive 66.09%, highlighting its ability to maintain profitability on its services despite not being profitable over the last twelve months. However, the stock is trading at high EBITDA and revenue valuation multiples, suggesting that growth expectations are factored into its current market price.
For those interested in a deeper analysis, there are additional InvestingPro Tips available, including insights on Paycor's expected profitability and dividend policy. With the use of coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these tips and more. Currently, there are 9 additional InvestingPro Tips that can further inform investment decisions regarding Paycor HCM Inc.
InvestingPro Data metrics also reveal a market capitalization of $3.12 billion and a revenue growth of 20.35% in the last twelve months as of Q3 2024. This growth, alongside the company's strategic initiatives, could be pivotal for potential investors. The stock's previous close was at $17.50, with a fair value estimated by analysts at $23.00, slightly above the InvestingPro fair value of $23.20. This data may assist in evaluating the stock's current position and future potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.