Why Paychex Inc. Shares Could Fly to $50

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Paychex  (NASDAQ: PAYX  ) gained 1% on Tuesday after Goldman Sachs resumed coverage on the payroll processing giant with a "conviction buy" rating.

So what: Along with the bullish call, analyst James Schneider planted a price target of $49 on the stock, representing about 18% worth of upside to yesterday's close. So while momentum traders might be turned off by Paychex's year-to-date price weakness, Schneider's call could reflect a sense on Wall Street that its growth prospects are becoming too cheap to pass up.

Now what: According to Goldman, Paychex's risk/reward trade-off is rather attractive at this point. "We believe market concerns around intensifying competition from cloud vendors are overdone, and think Paychex's integrated approach to payroll and HR services supported by a broad-based services model will continue to differentiate it," said Schneider. "In our view, this is evident from continuous improvement in operating margins and growing client retention rates, in spite of the noise around cloud cannibalization." Given Goldman's solid stock-picking track record -- currently ranked in the top 15% of our CAPS community -- value-oriented Fools might want to take a closer look at Paychex.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3021115, ~/Articles/ArticleHandler.aspx, 11/27/2014 8:53:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement