6/24/2010- Citigroup analysts are reducing their price target to $29, down from $32, for Paychex (NASDAQ:PAYX) and their 2011 and 2012 EPS estimates for the company.
The bank now sees fiscal 2011 EPS of $1.38, down from $1.44, vs. consensus estimates of $1.42 per share, and fiscal 2012 EPS of $1.54, down from $1.67, vs. consensus estimates of $1.55 per share.
Analyst Ashwin Shirvaikar said, "PAYX results and guidance support our view that the slow pace of employment and interest rate recovery makes fiscal 2011 a "transition" year. Secondly, the cumulative impact of the continued decline in the number of clients more than offsets the modest turn in the checks-per-client metric. Lastly, in addition to the slow top-line recovery, the margin improvement that bulls on the name expect will likely have to wait a year as PAYX re-invests in its employees and business this year after the extreme cost-cutting in fiscal 2009-10. So, we maintain a cautious Hold rating on PAYX and continue to prefer ADP, where expectations are more muted and the valuation is more favorable."