Paychex Price Target Lowered by RBC Amid Growth Concerns

RBC Capital Markets lowered its price target on Paychex (NASDAQ: PAYX) to $102 from $125, while maintaining a Sector Perform rating, citing concerns around future revenue growth and macroeconomic pressures.

The firm said it expects Paychex to exceed its conservative third-quarter fiscal 2026 guidance, supported by tailwinds from Paychex Flex (PYCR) form-filling revenues and seasonally higher client fund balances.

These positives are expected to be partially offset by lower attach rates and increased discounting within the Administrative Services Organization (ASO) business.

RBC also expects meaningful improvement in Professional Employer Organization (PEO) growth, driven by easier year-over-year comparisons due to prior impacts from MPP enrollments, as well as strong double-digit bookings growth in recent quarters.

However, the firm highlighted risks to the company’s fiscal 2026 revenue outlook, noting that guidance implies a significant acceleration in growth during the fourth quarter despite a challenging macroeconomic environment, ongoing pricing pressures, and potential headwinds from generative AI adoption.