ADP Q2 revenue beats; raises FY profit forecast

Overview

• HR and payroll solutions firm's Q2 revenue rose 6%, beating analyst expectations

• Adjusted EPS for Q2 beat analyst expectations, growing 11% to $2.62

• Company raised full-year guidance for revenue and adjusted EPS growth

Outlook

• ADP raises full-year revenue growth guidance to about 6%

• Company expects diluted EPS growth of 9% to 10% for fiscal 2026

• ADP anticipates interest on funds held for clients of $1.310 to $1.330 bln

Result Drivers

• INNOVATIVE PRODUCTS - ADP credited its strong Q2 results to innovative products and differentiated service, as stated by CEO Maria Black

• NEW BUSINESS BOOKINGS - CFO Peter Hadley noted that a focus on execution and new business bookings growth drove revenue and earnings growth

• INTEREST ON CLIENT FUNDS - Interest on funds held for clients increased 13% to $309 million, contributing to overall revenue growth

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 11 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the it services & consulting peer group is "buy."

• Wall Street's median 12-month price target for Automatic Data Processing Inc is $290.00, about 13.9% above its January 27 closing price of $254.51

• The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 26 three months ago

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