Paychex Stock Rises After Q2 Earnings Marginally Beat Estimates: Unconvinced Retail Pushes Sentiment To 1-Year Low

Shares of Paychex Inc (PAYX) rose nearly 2% on Thursday after the firm’s second-quarter earnings came in marginally better than expected.

Total revenue rose 5% year-over-year (YoY) to $1.316 billion compared to a Wall Street estimate of $1.312 billion. Earnings per share stood at $1.14 versus an analyst estimate of $1.12. Net income rose 5% YoY to $413.4 million during the quarter.

Segment-wise, Management Solutions revenue rose 3% to $962.9 million primarily impacted by the growth in the number of clients served and higher product penetration. Lower revenue from ancillary services also impacted the firm’s revenues.

Professional Employer Organization and Insurance Solutions revenue grew 7% to $317.9 million due to growth in the number of average PEO worksite employees and increase in PEO insurance revenues.

As of Nov. 30, 2024, the company had cash, restricted cash, and total corporate investments of $1.3 billion and had short-term and long-term borrowings, net of debt issuance costs, of $817.1 million. The firm did not make any changes to its fiscal 2025 outlook.

Despite the rise in stock price, retail sentiment on Stocktwits fell into the ‘extremely bearish’ territory (8/100) from ‘neutral’ a day ago, hitting a one-year low. The move was accompanied by ‘extremely high’ message volumes.

PAYX’s Sentiment Meter and Message Volume as of 11:13 a.m. ET on Dec. 19, 2024 | Source: Stocktwits

Recently, JPMorgan analyst Tien-tsin Huang raised the price target on the stock to $139 from $133, while keeping an ‘Underweight’ rating on the shares, according to The Fly.

Shares of the firm have gained over 17% since the beginning of the year.

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