2024-01-04 08:58:09 ET
Wolfe upgraded Automatic Data Processing ( NASDAQ: ADP ) to Peer Perform from Underperform, saying that it sees the cloud-based human capital management solutions provider having mid-teens revenue exposure to small businesses.
The brokerage believes that a gradual re-normalization of the yield curve can benefit EPS as the company borrows commercial paper to fund longer-term investments.
“While Wolfe remains cautious on the employment environment heading into 2024, it believes that if unemployment were to begin to rise in a more material way, it prefers ADP relative to PAYX given the company's more diverse client exposure,” it said.
Seeking Alpha analysts, Wall Street and Seeking Alpha’s Quant Ratings are cautious on the stock and consider it Hold.
Earlier in October, the company delivered a mixed bag of fiscal first quarter results, while maintaining fiscal 2024 consolidated outlook for revenue growth of 6% to 7%.
The Roseland, New Jersey-based company, which has a market valuation of over $90 billion, fell nearly 2% in the last one year.
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Wolfe sees ADP having small businesses revenue exposure, upgrades rating