On Thursday, Deutsche Bank adjusted its outlook on ADP (NASDAQ:ADP), a provider of human capital management solutions, by increasing its price target to $265 from the previous $245 while maintaining a Hold rating on the stock.
The revision reflects the bank's response to recent discussions with ADP's leadership and an analysis of market trends.
The firm's decision follows investor meetings in San Francisco and Los Angeles with ADP's CEO Maria Black and CFO Don McGuire. During these sessions, the executives shared insights into employment trends, ADP's competitive stance, and the company's technological transformation within the human capital management (HCM) landscape.
According to the bank's commentary, ADP is experiencing robust demand in the smaller business segment, driven by new business starts and a normalization of bankruptcies.
Small to medium-sized businesses (SMBs) are showing strong sales in insurance, workers' compensation, and retirement services. The mid-market is also performing well, bolstered by the popularity of ADP's Workforce Now product, while demand in the upmarket is stabilizing at a new normal.
ADP is also closely monitoring its international markets. Recent booking trends in the professional employer organization (PEO) services suggest potential for accelerated growth, although the timing for achieving double-digit revenue growth, as outlined in ADP's medium-term goals, remains uncertain.
The company plans to host an analyst day around November 2024, which is expected to provide further insights into key markets, trends, and the company's outlook.
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