Paychex (PAYX) slides despite earnings beat

Paychex (NASDAQ: PAYX) shares fell early Thursday after the company reported its fiscal second-quarter results before the bell.

Paychex reported earnings of $0.99, $0.04 better than the analyst estimate of $0.95, while revenue for the quarter rose 7% year-over-year to $1.19 billion versus the consensus estimate of $1.19 billion.

The company's shares are down 4.92% at $109.12 per share at the time of writing.

"We posted solid financial results for the second quarter, with growth of 7% in total revenue and 9% in diluted earnings per share, driven by our strong execution and comprehensive suite of solutions," said John Gibson, President and Chief Executive Officer of Paychex.

The company said that during the current macroeconomic climate, it is well-positioned to "help companies find and retain employees, drive operational efficiency, and address complex Human Resource ("HR") issues."

For fiscal 2023, Paychex sees revenue growing approximately 8%, with adjusted earnings per share expected to increase from 12% to 14%.

Following the report, Cowen analyst Bryan Bergin, who has an Outperform rating and $132 price target on the stock, said the company reported a "healthy 1Q with rev inline and EPS 5% ahead, led by Management Solutions growth and better float more than offsetting slower PEO&Ins growth."

"FY23 outlook raised modestly more than 1Q beat with growth now targeted at 8% (up from 7-8% prior) and EPS expansion of 12-14% (+150 bps). Overall solid result inline to slightly better than expectations," he added.

By Sam Boughedda

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