Key Stats for Automatic Data Processing Stock
- 52-Week Range: $188 to $330
- Current Price: $202
- Street Mean Target: $261
- Street High Target: $332
- TIKR Model Target (Jun. 2031): $295
What Happened?
Automatic Data Processing (ADP), the world’s largest payroll and human capital management provider serving more than one million clients across 140 countries, is trading near its 52-week low of $188.16 with Automatic Data Processing stock down roughly 30% year to date, even as the company just raised full-year guidance and delivered its strongest client satisfaction quarter in company history.
In its fiscal second quarter, ADP reported revenue of $5.40 billion, a 6% year-over-year increase that beat consensus estimates of $5.34 billion, while adjusted earnings per share came in at $2.62, up 11% and ahead of the $2.57 analyst estimate.
The standout was not the beat itself but what drove it: Lyric HCM, ADP’s enterprise cloud platform for large organizations, saw new business bookings exceed expectations for the second consecutive quarter, with more than 70% of pipeline wins coming from new logos rather than existing clients.
CEO Maria Black stated on the Q2 fiscal 2026 earnings call that “Lyric’s new business pipeline continued to expand at a rapid pace,” while noting that two of the largest deals in Lyric’s history — each covering companies with more than 20,000 employees — were closed in the quarter.
Off the strength of Lyric momentum, the $6 billion share buyback authorization replacing the prior $5 billion program, a 10% dividend increase to $1.70 per quarter, and continued new business bookings growth across every segment, ADP now expects full-year revenue to grow about 6% and adjusted EPS to grow 9% to 10% in fiscal 2026.
The WorkForce Suite, launched in Q2 following ADP’s October 2024 acquisition of WorkForce Software, added a unified time, pay, and HR experience to ADP’s payroll platforms, and already contributed to several new wins in the quarter.
Wall Street’s Take on ADP Stock
The Q2 beat closes the loop on a question that had been hanging over ADP stock since late 2025: whether the company could sustain double-digit EPS growth while the broader labor market slowed.
ADP’s normalized EPS reached $10.01 in fiscal 2025 and consensus estimates have it growing to around $11 in fiscal 2026 and around $12 in fiscal 2027, a trajectory powered by Lyric’s enterprise momentum and the WorkForce Suite integration rather than by macro hiring tailwinds.
Fifteen analysts cover ADP stock currently, with 3 buys, 1 outperform, 11 holds, and 3 sells or underperforms; the mean price target sits at $260.60, implying about 29% upside from the current price, and what the consensus is specifically waiting for is evidence that Lyric’s new logo wins translate into durable revenue once those enterprise implementations complete.
The target spread runs from $208 on the low end to $332 on the high end, a range wide enough to signal a genuine disagreement: bears anchor to the labor market deceleration and PEO worksite employee growth moderating to about 2%, while bulls point to the Lyric pipeline and the WorkForce Suite’s first cross-sell wins as proof that ADP is extracting a second growth engine independent of payroll volume.
Trading at roughly 18x forward earnings against a five-year historical average closer to 26x, with consensus EPS growth of around 9% through fiscal 2027 backed by a $6 billion buyback program, Automatic Data Processing stock appears undervalued given a platform upgrade cycle that is producing record client satisfaction scores and 70% new-logo bookings on Lyric.
Black’s comment that Lyric “continues to fare favorably against our competitors” on 70%-plus new logo wins reframes the competitive narrative: ADP is not defending share but actively taking it from Workday and SAP in the large enterprise segment.
If PEO worksite employee growth deteriorates meaningfully below the current 2% outlook, the revenue contribution that bridges the EPS growth target narrows and the model’s base assumption cracks.
The Q3 fiscal 2026 earnings release on April 29 is the next inflection point: watch whether Lyric bookings maintain their pace and whether pays-per-control growth rounds to 1% or slips back to 0%, the two metrics that will confirm or deny whether the full-year 9% to 10% EPS growth guide is tracking.
What Does the Valuation Model Say?
The TIKR model’s mid-case target of around $295 is built on a revenue CAGR of about 4% from 2025 through 2030, a net income margin expanding toward 21%, and EPS growth compounding at around 5% annually — assumptions that look conservative against the 9% to 10% EPS growth management just guided for fiscal 2026 and the accelerating Lyric pipeline that has yet to hit the revenue line at scale.
With ADP stock trading at roughly 18x forward earnings while the TIKR mid-case implies a total return of around 46% to around $295 by fiscal 2030 and the high case reaching around $437, Automatic Data Processing stock appears undervalued relative to both its own five-year historical multiple and the earnings growth rate embedded in current guidance.
The central tension in ADP’s investment case is whether the Lyric and WorkForce Suite platform cycle can deliver durable EPS compounding that is independent of payroll volume growth — and the Q2 data says yes, but the jury is still out on implementation timelines.
Bull Case
- Lyric new business bookings exceeded expectations in Q2 for the second consecutive quarter, with 2 clients over 20,000 employees closed and more than 70% of pipeline from new logos
- ADP WorkForce Suite already contributing to new deal wins within one quarter of launch, creating a cross-sell revenue stream the model has not yet priced in
- $6 billion share repurchase authorization (up from $5 billion) supports around 9% to 10% adjusted EPS growth even in a flat-hiring environment
- Pays-per-control growth improving slightly to round up to 1% in Q2, counter to market fears of labor market deterioration
- Adjusted EBIT margin expanded 80 basis points in Q2, with management guiding for further back-half improvement driven by operating leverage and float income growth
Bear Case
- PEO average worksite employee growth revised down to about 2% for full-year fiscal 2026, with Q2 bookings coming in slightly below expectations
- Macro hiring slowdown is structural: ADP’s own National Employment Report showed only 22,000 private sector jobs added in January 2026, down from 398,000 total in 2025 vs 771,000 in 2024
- Q3 float portfolio faces a roughly 75 basis point yield headwind year-over-year due to Fed rate cuts, compressing the margin cadence that supported Q2’s outperformance
- Lyric implementation cycles for 20,000-employee clients are long and lumpy; pipeline growth does not translate quickly to recognized revenue
- At 15 holds and 3 sells or underperforms versus only 4 buys among 15 covering analysts, the conviction gap suggests the Street sees limited near-term catalysts to close the valuation discount
Should You Invest in Automatic Data Processing, Inc.?
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