Weekly Investment Analysts’ Ratings Changes for Automatic Data Processing (ADP)

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Several brokerages have updated their recommendations and price targets on shares of Automatic Data Processing (NASDAQ: ADP) in the last few weeks:

  • 8/15/2018 – Automatic Data Processing was upgraded by analysts at BidaskClub from a “buy” rating to a “strong-buy” rating.
  • 8/14/2018 – Automatic Data Processing was downgraded by analysts at Zacks Investment Research from a “buy” rating to a “hold” rating. According to Zacks, “ADP reported strong fourth-quarter fiscal 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. 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 the company. Further, the company’s strong balance sheet enables it to continue with its shareholder friendly activities alongside strategic buyouts and investments on product development. In fact, the company has outperformed the industry it belongs to, in a year's time. However, ADP faces significant competition in each of its product lines. Failure to meet varying client demands with updated technologies might reduce the demand for its solutions and services, thus hampering its position in the market. Further, the company’s dependence on its payroll, financial, accounting, and other data processing systems remains a concern.”
  • 8/13/2018 – Automatic Data Processing had its price target raised by analysts at Argus from $145.00 to $150.00. They now have a “buy” rating on the stock.
  • 8/10/2018 – Automatic Data Processing is now covered by analysts at Credit Suisse Group AG. They set an “outperform” rating and a $160.00 price target on the stock.
  • 8/1/2018 – Automatic Data Processing was downgraded by analysts at BidaskClub from a “strong-buy” rating to a “buy” rating.
  • 7/17/2018 – Automatic Data Processing is now covered by analysts at Wolfe Research. They set an “outperform” rating on the stock.
  • 7/12/2018 – Automatic Data Processing was downgraded by analysts at Zacks Investment Research from a “strong-buy” rating to a “hold” rating. They now have a $152.00 price target on the stock. According to Zacks, “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 the company. Further, the company’s strong balance sheet enables it to continue with its shareholder friendly activities alongside strategic buyouts and investments on product development. In fact, the company has outperformed the industry it belongs to, in a year's time. However, ADP faces significant competition in each of its product lines. Failure to meet varying client demands with updated technologies might reduce the demand for its solutions and services, thus hampering its position in the market. Further, the company’s dependence on its payroll, financial, accounting, and other data processing systems remains a concern.”

ADP traded down $0.20 during midday trading on Monday, reaching $142.35. The company had a trading volume of 69,051 shares, compared to its average volume of 2,265,655. The company has a quick ratio of 1.05, a current ratio of 1.05 and a debt-to-equity ratio of 0.58. The stock has a market cap of $61.02 billion, a price-to-earnings ratio of 32.72, a PEG ratio of 2.37 and a beta of 0.88. Automatic Data Processing has a 12-month low of $102.81 and a 12-month high of $142.95.

Automatic Data Processing (NASDAQ:ADP) last released its earnings results on Wednesday, August 1st. The business services provider reported $0.92 earnings per share for the quarter, beating the Zacks’ consensus estimate of $0.90 by $0.02. The firm had revenue of $3.32 billion for the quarter, compared to analysts’ expectations of $3.29 billion. Automatic Data Processing had a net margin of 12.16% and a return on equity of 50.17%. The company’s quarterly revenue was up 8.3% on a year-over-year basis. During the same period in the previous year, the company earned $0.66 earnings per share. sell-side analysts anticipate that Automatic Data Processing will post 5.18 earnings per share for the current year.

The firm also recently declared a quarterly dividend, which will be paid on Monday, October 1st. Investors of record on Friday, September 14th will be paid a dividend of $0.69 per share. This represents a $2.76 dividend on an annualized basis and a dividend yield of 1.94%. The ex-dividend date is Thursday, September 13th. Automatic Data Processing’s payout ratio is currently 63.45%.

In related news, VP Maria Black sold 8,137 shares of the company’s stock in a transaction that occurred on Wednesday, June 13th. The shares were sold at an average price of $138.22, for a total transaction of $1,124,696.14. The sale was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, insider Michael A. Bonarti sold 2,372 shares of the company’s stock in a transaction that occurred on Monday, July 2nd. The shares were sold at an average price of $132.66, for a total transaction of $314,669.52. Following the sale, the insider now owns 41,023 shares in the company, valued at $5,442,111.18. The disclosure for this sale can be found here. Insiders have sold a total of 23,723 shares of company stock worth $3,223,283 over the last 90 days. 0.25% of the stock is currently owned by corporate insiders.

Several hedge funds have recently made changes to their positions in the stock. Millennium Management LLC lifted its stake in Automatic Data Processing by 328.6% in the 2nd quarter. Millennium Management LLC now owns 2,221,504 shares of the business services provider’s stock worth $297,993,000 after purchasing an additional 1,703,162 shares in the last quarter. Senator Investment Group LP purchased a new stake in Automatic Data Processing in the 2nd quarter worth approximately $174,382,000. Morgan Stanley lifted its stake in Automatic Data Processing by 11.7% in the 2nd quarter. Morgan Stanley now owns 7,671,784 shares of the business services provider’s stock worth $1,029,094,000 after purchasing an additional 801,928 shares in the last quarter. PNC Financial Services Group Inc. lifted its stake in Automatic Data Processing by 48.9% in the 2nd quarter. PNC Financial Services Group Inc. now owns 2,300,258 shares of the business services provider’s stock worth $308,556,000 after purchasing an additional 755,124 shares in the last quarter. Finally, BTIM Corp. purchased a new stake in Automatic Data Processing in the 2nd quarter worth approximately $93,401,000. Institutional investors own 78.93% of the company’s stock.

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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