Core Insights - Paylocity Holding Corporation (PCTY) is recognized as a strong investment opportunity, ranking fifth among the 15 Best Strong Buy Tech Stocks to Invest In [1] - Several financial institutions have adjusted their price targets for PCTY, reflecting a mix of strong performance and cautious outlooks [2][3] Financial Performance - Paylocity reported strong results with notable progress in margins and free cash flow, prompting Baird to lower its price target to $220 from $245 while maintaining an Outperform rating [1][8] - TD Cowen also lowered its price target to $178 from $188 but maintained a Buy rating, citing solid Q2 performance and a strong competitive position supported by AI-driven advantages [2] - BMO Capital reduced its price target to $150 from $185, describing the quarter as solid but noting lighter-than-expected recurring growth upside [3] Future Projections - On February 5, Paylocity revised its fiscal year 2026 forecast, estimating recurring and other revenue between $1.62 billion and $1.63 billion, indicating a growth of approximately 10% to 11% over fiscal 2025 [4] - The company anticipates adjusted EBITDA to fall between $622.5 million and $630.5 million, demonstrating sustained operational excellence [4] Company Overview - Paylocity is a U.S. provider of cloud-based payroll and human capital management (HCM) software, offering a range of solutions to help mid-market organizations streamline workforce operations [5]

Core Insights - Paylocity Holding Corporation (NASDAQ:PCTY) is identified as one of the most oversold stocks on NASDAQ, with a Buy rating reiterated by Mizuho and a price target set at $150.00 [1] - The company reported fiscal Q2 2026 financial results, showing recurring and other revenue of $387.0 million, an 11.3% increase year-over-year, and total revenue of $416.1 million, up 10.4% compared to fiscal Q2 2025 [1] - Paylocity demonstrated strong cash flow performance, with a trailing twelve months net cash provided by operating activities margin of 28.3% and a free cash flow margin of 23.6% [1] Rating Updates - Following the financial results, Baird adjusted its price target for Paylocity to $220 from $245 while maintaining an Outperform rating, citing progress on margins and free cash flow [3] - TD Cowen also revised its price target to $178 from $188, keeping a Buy rating, and noted the company's strong fiscal Q2 performance and positive outlook regarding AI displacement and valuation [3] Company Overview - Paylocity develops and provides cloud-based software solutions, including payroll, human capital management, benefits administration, time labor tracking, and talent management [4]

Core Viewpoint - The article suggests that several human capital management (HCM) technology stocks are currently in oversold territory and may present buying opportunities following a strong U.S. jobs report in January, where 130,000 jobs were added, exceeding expectations of 68,000-75,000, and the unemployment rate decreased to 4.3% from an expected 4.4% [1]. Group 1: Workday (WDAY) - Workday is identified as the largest global HCM applications vendor, with its stock down nearly 50% from its 52-week high of $281 per share [4][5]. - Despite slower annual revenue growth, a 12% increase is projected for FY26 and FY27, with revenue approaching $10 billion [5]. - Annual earnings are expected to rise by 24% this year and another 16% in FY27 to $10.57 per share, with the stock trading at its lowest forward earnings multiple of 14X since becoming profitable [6]. Group 2: Paylocity (PCTY) - Paylocity, which provides cloud-based payroll and HCM software solutions, has seen its stock price cut in half from a one-year high of $218 per share [9]. - The stock is considered affordable, with single-digit growth appealing at a 15X forward earnings multiple, and it recently reported Q2 EPS of $1.85, exceeding expectations of $1.57 and up 21% from $1.52 a year ago [10]. Group 3: Automatic Data Processing (ADP) - ADP is recognized as a diverse provider of HCM technology solutions, with its stock down more than 30% from its 52-week high of $329 per share [12]. - The stock is trading at a reasonable 20X forward earnings multiple, with projected EPS growth of over 9% for FY26 and FY27 [13]. - ADP is forecasted to have 5% annual revenue growth, with strong financial figures, cash flow, and recurring revenue, and is noted as a Dividend King with a current annual yield of 3.02% [14][15].

In this article, we will look at the 13 Oversold NASDAQ Stocks to Invest In.On February 6, Richard Bernstein, Richard Bernstein Advisors CEO, appeared on CNBC’s ‘The Exchange’ to talk about the state of equity markets. He stated that we have argued for a long time that the broadening of the market would be extraordinarily healthy, and that has been going on since the end of October, more or less. He thinks this is “very healthy”, and that people are not realising how strong the overall economy is, with nomi ...

Core Viewpoint - Paylocity (PCTY) has experienced a significant decline of 24.8% over the past four weeks, but it is now positioned for a potential trend reversal as it enters oversold territory, with analysts expecting better earnings than previously predicted [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a momentum oscillator that indicates whether a stock is oversold, with readings below 30 typically signaling this condition [2]. - PCTY's current RSI reading is 20.7, suggesting that the heavy selling pressure may be exhausting, indicating a possible bounce back towards equilibrium in supply and demand [5]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that earnings estimates for PCTY have increased by 1% over the last 30 days, which often correlates with price appreciation in the near term [7]. - PCTY holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the stock's potential for a turnaround [8].

Core Viewpoint - Paylocity (PCTY) is a cloud payroll and human capital management (HCM) software provider based in the US, with a history of coverage since 2020 [1]. Group 1 - Paylocity has been followed for multiple years, indicating a sustained interest in its performance and market position [1].

Core Viewpoint - Baird has lowered the price target for Paylocity (PCTY) to $220 from $245 while maintaining an Outperform rating on the shares, indicating a positive outlook despite the price adjustment [1] Summary by Category Price Target Adjustment - The price target for Paylocity has been reduced to $220 from $245 [1] Rating - Baird continues to hold an Outperform rating on Paylocity shares, suggesting confidence in the company's performance [1] Financial Performance - The model update by Baird follows results that demonstrated significant improvements in margins and free cash flow for Paylocity [1]

Core Insights - Paylocity (PCTY) reported a second-quarter fiscal 2026 non-GAAP net income of $1.85 per share, exceeding the Zacks Consensus Estimate by 17.83% [1] - Revenues increased by 10.4% year over year to $416.1 million, surpassing the Zacks Consensus Estimate by 1.78% [1] Revenue Growth - The top-line growth was driven by an 11.3% increase in recurring and other revenues, which accounted for 93% of total revenues, reaching $387 million [2][8] - Interest income on funds held for clients, representing 7% of total revenues, declined by 0.4% year over year to $29.2 million [2] Quarterly Financial Performance - Adjusted gross profit was $309.5 million, reflecting an 11.2% increase from the previous year, with an adjusted gross margin of 74.4%, up 50 basis points [3] - Non-GAAP operating income rose by 17.8% year over year to $119.1 million, with a non-GAAP operating margin expanding by 180 basis points to 28.6% [3] - Adjusted EBITDA increased by 13.1% to $142.7 million, with an adjusted EBITDA margin of 34.3%, up 90 basis points [3] Balance Sheet & Cash Flow - As of December 31, 2025, cash and cash equivalents were $162.5 million, down from $398.1 million as of June 30, 2025 [4] - Long-term debt stood at $81.3 million, reflecting borrowings to fund the acquisition of Airbase Inc. [4] - Net cash provided by operations for the first six months of fiscal 2026 was $203.5 million, compared to $145.7 million for the same period in fiscal 2025 [5] - The company repurchased shares worth $100 million during the fiscal second quarter [5] Guidance and Long-Term Targets - For the second quarter of fiscal 2026, total revenues are expected to be between $405.5 million and $410.5 million, indicating an 8% growth year over year [6] - Adjusted EBITDA is projected to be in the range of $131.5 million to $135.5 million [6] - For fiscal 2026, total revenues are anticipated to be between $1.715 billion and $1.730 billion, also implying an 8% growth [6] - Long-term financial targets have been updated, raising the total revenue target from $2 billion to $3 billion and increasing adjusted gross profit margin targets to 80% or higher [7][9]

Revenue Growth - Total revenues increased from $377.0 million for the three months ended December 31, 2024 to $416.1 million for the three months ended December 31, 2025, representing a 10% year-over-year increase [88]. - Total revenues for the three months ended December 31, 2025, increased by $39.3 million, or 10.4%, to $416.1 million from $376.9 million for the same period in 2024 [112]. - Recurring and other revenue accounted for 92% and 93% of total revenues for the three months ended December 31, 2024 and 2025, respectively [96]. - Recurring and other revenue for the six months ended December 31, 2025, increased by $85.0 million, or 12%, to $765.8 million from $680.8 million for the same period in 2024 [123]. Profitability Metrics - Adjusted Gross Profit for the three months ended December 31, 2025 was $309.5 million, up from $278.2 million in the same period of 2024, reflecting a year-over-year increase of 11% [92]. - Adjusted EBITDA for the three months ended December 31, 2025 was $142.7 million, compared to $126.2 million for the same period in 2024, indicating a year-over-year increase of 13% [93]. - Operating income for the three months ended December 31, 2025, increased by $23.8 million, or 51%, to $70.4 million from $46.6 million for the same period in 2024 [112]. - Net income for the three months ended December 31, 2025, increased by $12.7 million, or 33.9%, to $50.2 million from $37.5 million for the same period in 2024 [112]. - Gross profit margin improved from 67% for the three months ended December 31, 2024, to 68% for the same period in 2025 [115]. Expenses - Sales and marketing expenses are expected to continue increasing in absolute dollars as the company grows its sales organization and expands marketing activities [102]. - Sales and marketing expenses for the three months ended December 31, 2025, increased by $4.9 million, or 5%, to $98.1 million from $93.1 million for the same period in 2024 [116]. - Research and development expenses for the three months ended December 31, 2025 totaled $76.4 million, up from $73.4 million in the same period of 2024 [105]. - Research and development expenses for the three months ended December 31, 2025, increased by $1.6 million, or 3%, to $57.7 million from $56.2 million for the same period in 2024 [117]. - General and administrative expenses rose by $4.9 million, or 5%, to $109.5 million for the six months ended December 31, 2025, from $104.7 million in 2024 [129]. Cash Flow and Investments - Net cash provided by operating activities was $203.5 million for the six months ended December 31, 2025, up from $145.7 million in 2024 [147]. - Net cash used in investing activities decreased significantly to $27.5 million for the six months ended December 31, 2025, compared to $301.0 million in 2024 [148]. - Net cash provided by financing activities increased to $2,403.7 million for the six months ended December 31, 2025, from $835.5 million in 2024, primarily due to a net change in client fund obligations [150]. - Capital expenditures were $7.2 million for the six months ended December 31, 2025, compared to $5.3 million in 2024, excluding capitalized internal-use software costs [153]. Taxation - The effective tax rate for the three months ended December 31, 2025, was 28.5%, up from 20.0% for the same period in 2024 [121]. - The effective tax rate increased to 32.3% for the six months ended December 31, 2025, compared to 24.8% in 2024, primarily due to stock-based compensation shortfalls and state and local income taxes [131][132]. Market and Economic Conditions - Inflation has not had a material effect on the company's business, but significant inflationary pressures could harm its financial condition and results of operations [162]. - The company does not anticipate significant impacts on operations from hypothetical changes of 100 basis points in interest rates [161]. Financial Position - As of December 31, 2025, the company had $162.5 million in cash and cash equivalents and a $550.0 million revolving credit facility [138]. - The company maintains a revolving credit facility of $550.0 million, which can be increased to $825.0 million, with $81.3 million in borrowings outstanding as of December 31, 2025 [161]. - As of December 31, 2025, the company had cash and cash equivalents of $162.5 million and funds held for clients amounting to $5,510.2 million [157]. Interest Rate Exposure - Interest income on funds held for clients is generated from advance collections for payroll and related services, contributing to overall revenue [98]. - Interest income on funds held for clients for the three months ended December 31, 2025, was flat at $29.2 million compared to $29.3 million for the same period in 2024 [114]. - An immediate 100-basis point increase in interest rates would decrease the market value of available-for-sale securities by $12.6 million, while a decrease of 100 basis points would increase the market value by $13.0 million [159]. - Interest rates applicable to the credit facility are variable, exposing the company to market risk from changes in underlying index rates [161]. - The company has not recorded any credit impairment losses on its portfolio to date [158]. - The investment policy focuses on generating higher yields while preserving liquidity and capital, exposing the company to interest rate changes [157]. - Fluctuations in the value of available-for-sale securities are recorded in other comprehensive income and realized only upon sale [160].

Jefferies sets a new price target for Paylocity (NASDAQ:PCTY) at $150, indicating an 18.06% potential upside.The company's Q2 2026 earnings call highlights a commitment to innovation and customer satisfaction.Paylocity's current market capitalization stands at approximately $7 billion, with a trading volume of 2,164,293 shares.Paylocity Holding Corporation, listed on NASDAQ under the symbol PCTY, is a prominent player in the human capital management industry. The company offers cloud-based payroll and human ...