Needham Reiterates Buy Rating on Paylocity Holding (PCTY)

Needham analyst Scott Berg reiterated a Buy rating and $200.00 price target on Paylocity Holding (NASDAQ: PCTY).

The analyst commented: "PCTY announced the pending acquisition of spend management platform Airbase for $325mm cash. While the deal pushes PCTY deeper into the Office of the CFO, our biggest question is if customers will buy into this strategy given its uniqueness paring HCM and spend? We believe this strategy can work well down market but within the 1k-5k employee sized company needs to be proved out. The deal pushes the boundary of what fits within an HCM suite, but we believe a major cross-selling opportunity selling Airbase into PCTY customers exists. At 16x revenue, the deal is expensive but the significant size of the end market could justify the price. Airbase adds $20mm in runrate revenue but will likely add ~$15mm in revenue and a 100 BP headwind to adj. EBITDA estimates. We are not updating our model due to uncertainity around close timing."

For an analyst ratings summary and ratings history on Paylocity Holding click here. For more ratings news on Paylocity Holding click here.

Shares of Paylocity Holding closed at $160.51 yesterday.

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