Key Stats for Automatic Data Processing Stock
- Past-Week Performance: -2%
- 52-week Range: $247 to $330
- Valuation Model Target Price: $329
- Implied Upside: 29.2% over 2.4 years
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What Happened?
Automatic Data Processing stock slipped about 2% over the past week, trading lower across several sessions and finishing near $253, after failing to hold recent highs around $260.
Shares briefly dipped into the high $240s to low $250s range midweek as selling pressure increased.
The decline was driven by a sell-the-news reaction after ADP’s fiscal second-quarter earnings.
The company reported $5.4 billion in revenue, up 6.2% year over year, and $2.62 in EPS, both ahead of expectations, while also raising full-year revenue guidance.
With the stock entering earnings near recent highs, results that confirmed strength rather than delivering a major upside surprise triggered short-term profit-taking.
Analyst updates during the week added context but did not reverse the pullback. Cantor Fitzgerald initiated coverage with an Overweight rating and a $306 price target, while Wells Fargo and BMO Capital trimmed their targets to $262 and $288, respectively, reflecting more balanced post-earnings expectations.
Overall, the weekly move reflected post-earnings consolidation, not weakening fundamentals. Strong revenue growth, higher guidance, expanding AI-driven offerings, and increased shareholder returns remain intact, suggesting the stock’s dip was driven by expectations resetting rather than a change in ADP’s business outlook.
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Is Automatic Data Processing Undervalued?
Under valuation model assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 5.9%
- Operating Margins: 27.2%
- Exit P/E Multiple: 22.8x
Based on these inputs, the model estimates a target price of $329, implying 29.2% total upside from recent levels over the next 2.4 years.
Over the next year, results are likely shaped by steady demand for payroll and workforce management services as compliance complexity and wage normalization continue to support HR outsourcing.
Expansion in AI-enabled tools, workforce analytics, and global payroll services adds margin support while deepening client relationships.
Retention strength remains a key driver, as ADP’s scale and embedded systems support predictable recurring revenue even during uneven hiring cycles.
Incremental efficiency gains from automation add operating leverage without requiring aggressive top-line growth.
Automatic Data Processing appears undervalued at current levels, with future performance driven by margin execution, retention stability, and continued demand for mission-critical HR services rather than a broad valuation reset.
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