ADP (ADP) Upgraded to Buy at Zacks Investment Research

Zacks Investment Research upgraded shares of ADP (NASDAQ:ADP) from a hold rating to a buy rating in a research report report published on Thursday morning. The brokerage currently has $130.00 target price on the business services provider’s stock.

According to Zacks, “ADP has been focused on streamlining its business to strengthen core-operations in the long run. To this end, the company has divested a number of its divisions in the past few years. Further, we note that ADP holds a dominant position in the payroll processing and HCM market, primarily due to its robust product portfolio. Acquisitions have also been a key growth catalyst for ADP. Further, the company’s strong balance sheet enables it to continue with its shareholder friendly activities alongside strategic buyouts and investments on product development. The stock has outperformed the S&P 500's growth on a year-over-year basis. However, we expect investments in new initiatives to continue to weigh on its bottom-line results. Moreover, rising unemployment levels will negatively impact the company. Increasing competition is another major headwind.”

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A number of other analysts have also recently issued reports on the company. Royal Bank of Canada reissued a neutral rating on shares of ADP in a research report on Thursday, February 1st. BidaskClub raised ADP from a sell rating to a hold rating in a research report on Wednesday, January 24th. Citigroup reaffirmed a neutral rating and set a $118.00 price objective (up from $110.00) on shares of ADP in a research report on Friday, January 12th. Barclays increased their price objective on ADP from $121.00 to $128.00 and gave the stock an equal weight rating in a research report on Thursday, February 1st. Finally, BMO Capital Markets decreased their price objective on ADP from $122.00 to $121.00 and set an outperform rating for the company in a research report on Thursday, February 1st. Nine research analysts have rated the stock with a hold rating and eight have issued a buy rating to the company’s stock. ADP presently has an average rating of Hold and an average target price of $120.21.

Shares of NASDAQ ADP traded down $0.30 during trading hours on Thursday, reaching $114.96. The stock had a trading volume of 540,826 shares, compared to its average volume of 2,277,606. The stock has a market cap of $51,233.11, a PE ratio of 31.11, a price-to-earnings-growth ratio of 2.54 and a beta of 0.88. The company has a quick ratio of 1.06, a current ratio of 1.06 and a debt-to-equity ratio of 0.51. ADP has a fifty-two week low of $95.50 and a fifty-two week high of $125.24.

ADP (NASDAQ:ADP) last announced its earnings results on Wednesday, January 31st. The business services provider reported $0.99 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.89 by $0.10. The firm had revenue of $3.24 billion during the quarter, compared to analysts’ expectations of $3.18 billion. ADP had a return on equity of 43.28% and a net margin of 13.47%. The business’s revenue was up 8.3% on a year-over-year basis. During the same period in the prior year, the firm earned $0.87 EPS. sell-side analysts anticipate that ADP will post 4.14 earnings per share for the current year.

The business also recently disclosed a quarterly dividend, which will be paid on Sunday, July 1st. Shareholders of record on Friday, June 8th will be given a dividend of $0.69 per share. This represents a $2.76 dividend on an annualized basis and a yield of 2.40%. This is a boost from ADP’s previous quarterly dividend of $0.63. The ex-dividend date is Thursday, June 7th. ADP’s dividend payout ratio (DPR) is presently 68.11%.

In other news, VP Stuart Sackman sold 238 shares of the firm’s stock in a transaction that occurred on Monday, January 22nd. The stock was sold at an average price of $121.65, for a total value of $28,952.70. Following the completion of the sale, the vice president now directly owns 18,676 shares of the company’s stock, valued at approximately $2,271,935.40. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, VP Maria Black sold 1,786 shares of the firm’s stock in a transaction that occurred on Tuesday, January 16th. The shares were sold at an average price of $119.72, for a total value of $213,819.92. Following the completion of the sale, the vice president now directly owns 11,858 shares of the company’s stock, valued at $1,419,639.76. The disclosure for this sale can be found here. Insiders sold a total of 104,161 shares of company stock valued at $12,037,893 over the last three months. Insiders own 0.25% of the company’s stock.

Several institutional investors and hedge funds have recently bought and sold shares of the company. Pershing Square Capital Management L.P. increased its stake in ADP by 402.5% in the 3rd quarter. Pershing Square Capital Management L.P. now owns 8,798,442 shares of the business services provider’s stock valued at $961,846,000 after purchasing an additional 7,047,575 shares in the last quarter. Polen Capital Management LLC increased its stake in ADP by 1.5% in the 4th quarter. Polen Capital Management LLC now owns 6,915,960 shares of the business services provider’s stock valued at $810,481,000 after purchasing an additional 102,031 shares in the last quarter. Geode Capital Management LLC increased its stake in ADP by 2.0% in the 4th quarter. Geode Capital Management LLC now owns 5,214,470 shares of the business services provider’s stock valued at $609,928,000 after purchasing an additional 103,129 shares in the last quarter. Arrowstreet Capital Limited Partnership increased its stake in ADP by 42.9% in the 4th quarter. Arrowstreet Capital Limited Partnership now owns 3,993,394 shares of the business services provider’s stock valued at $467,986,000 after purchasing an additional 1,199,402 shares in the last quarter. Finally, Legal & General Group Plc increased its stake in ADP by 1.5% in the 3rd quarter. Legal & General Group Plc now owns 2,556,663 shares of the business services provider’s stock valued at $279,491,000 after purchasing an additional 38,138 shares in the last quarter. 78.53% of the stock is owned by institutional investors and hedge funds.

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ADP Company Profile

Automatic Data Processing, Inc provides business process outsourcing services worldwide. The company operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers various human resources (HR) business process outsourcing and technology-enabled human capital management solutions.

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