Paychex (PAYX) is set to drive margin expansion through artificial intelligence efficiency, costlier new products, and revenue synergies, RBC Capital Markets analysts said in a note emailed Thursday.
Analysts said that in fiscal Q1, Paychex's PEO & Insurance division outperformed expectations, offsetting softer results from its Management Solutions business.
RBC said the company expects its Management Solutions business to accelerate in the second half of the year, driven by
better retention trends, continued price realization and higher sales headcount productivity.
The company expects to monetize artificial intelligence through several channels, including direct revenue from standalone products and higher revenue-per-client metrics, the firm noted.
RBC retained a sector perform rating and a $130 price target on the stock.
Price: $103.29, Change: $-1.21, Percent Change: -1.15%