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Automatic Data Processing Unlikely to See Valuation Lift Despite AWS Deal, UBS Says

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Automatic Data Processing (ADP) is unlikely to see a meaningful valuation boost from its expanded cloud partnership with Amazon.com's (AMZN) Amazon Web Services, as macro and industry concerns continue to weigh on the human-resources software sector, UBS Securities said Tuesday in a report.

ADP and AWS broadened their collaboration to move more of ADP's core payroll and tax systems onto AWS, including upgrades to its AI-driven tools and data platform. UBS said the initiative is strategically useful, though not enough to shift investor sentiment.

Labor-market indicators point to low churn, with muted hiring and separations, UBS said. The firm continues to prefer Paycom Software (PAYC) on product-driven share gains and stronger capital return.

UBS rates ADP stock neutral with a $290 price target.

ADP shares fell 0.9% in Wednesday trading, Amazon dropped 2.1%, and Paycom declined 1.1%.

Price: $265.66, Change: $-2.31, Percent Change: -0.86%

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