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Paychex Slashed to “Underperform” at Jefferies; Economic Backdrop Doesn’t Bode Well (PAYX)

By Dividend.com,  September 12, 2012, 09:20:31 AM EDT

Payroll and human resources specialist Paychex, Inc. ( PAYX ) on Wednesday caught a big downgrade from analysts at Jefferies & Co.

The firm cut its rating on PAYX from "Hold" to "Underperform" with a $31 price target, suggesting a 9% downside to the stock's Tuesday closing price of $34.11.

A Jefferies analyst commented, "We've been cautious for awhile on ADP ( ADP ) / PAYX; now we think it's time to sell the stocks. We downgrade both to Underperform from Hold, as we believe employment markets remain challenged, the interest rate environment will be a lingering headwind, and remaining secular tailwind is quite limited. Against this tough fundamental backdrop, these stocks carry the highest PEG ratio among large-cap, dividend-paying tech names in the S&P500."

Paychex shares were mostly flat in premarket trading Wednesday.

The Bottom Line
Shares of Paychex ( PAYX ) have a 3.75% dividend yield, based on last night's closing stock price of $34.11. The stock has technical support in the $31-$32 price area. If the shares can firm up, we see overhead resistance around the $36-$37 price levels.

Paychex, Inc. ( PAYX ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: ADP, PAYX



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