On Thursday, Piper Sandler adjusted its stance on Paylocity Holding (NASDAQ: NASDAQ:PCTY) shares, increasing the price target to $212 from the previous $172 while sustaining an Overweight rating on the stock. The firm's decision comes after Paylocity reported robust first-quarter results, surpassing consensus expectations with a 14% revenue growth and higher-than-anticipated EBITDA margins.
The company's revenue, which exceeded consensus by $6.6 million, was propelled by a combination of new sales and increased business from current clients. Paylocity's management expressed confidence in the current demand environment and the performance of their sales channels.
In response to the positive results, the company has revised its top-line forecast for fiscal year 2025 upwards by $22 million. This adjustment is attributed to contributions from Airbase, accounting for two-thirds, and organic revenues for the remaining third, aligning closely with the first-quarter's performance.
Piper Sandler's analysis suggests potential for the fiscal year 2025 targets to be exceeded, provided the favorable conditions persist. This outlook is supported by Paylocity's cautious yet deliberate approach to guidance. The firm also sees the acquisition of Airbase as a strategic move that could unlock additional market opportunities, potentially adding over $100 million in medium to long-term revenues.
The analyst's commentary underscores Paylocity's solid quarterly performance and the strategic initiatives that could drive future growth. With this optimistic view, Piper Sandler advocates for continued investment in Paylocity, as reflected in the raised price target.
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