UBS Affirms ‘Neutral' Rating on Automatic Data Processing (ADP) Following Guidance Adjustment
A trader in a busy trading room, surrounded by real-time market data and automated execution services.
The software company revised its revenue growth expectations to 6% and 7% at the event. Management also reiterated they expect earnings per share to grow by between 9% and 11%, a 200 basis point reduction from 2021 predictions.
Automatic Data Processing's Professional Employer Organization Segment accounts for about 35% of total revenue and is expected to grow by 6% and 8%, down from a previous forecast of 10% and 12%.
UBS remains optimistic about the company's long-term prospects, as it has a 15% market share in the human capital management market. Consequently, it is expected to generate significant value given that the total addressable market is expected to expand to $180 billion from $175 billion. Nevertheless, it maintains a neutral stance as it monitors the impact of technology and distribution investments on margins.
Automatic Data Processing, Inc. (NASDAQ:ADP) is a software application company that provides solutions that automate data handling, particularly through software and services, to streamline business operations.
While we acknowledge the potential of ADP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 12 Best Healthcare Stocks to Buy Now and 10 Stocks Analysts Are Upgrading Today.
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