Analyst Ratings January 28, 2026

BMO Capital Lowers ADP Price Target to $281, Cites Mixed Q2 Signals

Analyst trims target from $288 while holding a Market Perform rating after ADP beats fiscal Q2 estimates but shows mixed indicators

By Ajmal Hussain ADP
BMO Capital Lowers ADP Price Target to $281, Cites Mixed Q2 Signals
ADP

BMO Capital reduced its price target for Automatic Data Processing Inc. (ADP) to $281 from $288 and maintained a Market Perform rating after the company reported fiscal second-quarter results the firm called "mixed signals." The new target sits near InvestingPro’s Fair Value estimate, and comes as ADP posted EPS of $2.62 and revenue of $5.4 billion, both above analyst forecasts, even as the stock dipped in pre-market trading.

Key Points

  • BMO Capital lowered ADP’s price target to $281 from $288 and kept a Market Perform rating.
  • The new target aligns closely with InvestingPro’s Fair Value assessment and suggests the stock may be slightly undervalued at its current price of $250.69.
  • ADP beat fiscal second-quarter estimates with EPS of $2.62 (vs. $2.57 expected) and revenue of $5.4 billion (vs. $5.34 billion expected), yet its stock fell in pre-market trading.

BMO Capital on Wednesday cut its price target on Automatic Data Processing Inc. (NASDAQ:ADP) to $281.00 from $288.00, while retaining a Market Perform rating on the payroll processing firm.

The modest reduction in the target price follows ADP’s fiscal second-quarter results. BMO characterized those results as offering "mixed signals" that could be interpreted in either a bullish or bearish light, and said the ambiguity may hinder the stock’s ability to move decisively out of its current trading range in the near term.

After revising its financial model to reflect the quarterly report, BMO trimmed its target from $288 to $281. The new target is described as closely aligned with InvestingPro’s Fair Value assessment, and BMO noted that the current share price of $250.69 could imply the stock is slightly undervalued relative to that benchmark.

Despite the price target cut and cautious tone, BMO expressed a neutral stance toward ADP, saying it remained "comfortable on the sidelines for now." The firm also acknowledged ADP’s defensive qualities, suggesting those characteristics could prove helpful should macroeconomic or market conditions deteriorate.

Automatic Data Processing reported fiscal second-quarter results for 2026 that beat analyst expectations. The company posted earnings per share of $2.62 versus forecasts of $2.57, and reported revenue of $5.4 billion compared with an anticipated $5.34 billion. Even with those upside surprises, ADP shares moved lower in pre-market trading, a reaction BMO and market participants interpreted as indicative of investor caution.

BMO’s commentary highlighted the tension between the company’s solid near-term financial performance and market sentiment, while the earnings outcomes remain a central input for investors evaluating ADP’s financial health. The brokerage firm did not report any changes to its rating, and there have been no recent analyst upgrades or downgrades noted for ADP.


For investors and market observers, the development underscores a mix of positive fundamentals and tempered expectations: ADP’s reported EPS and revenues exceeded consensus estimates, yet valuation adjustments and the broker’s unchanged Market Perform view reflect continued caution.

Risks

  • Mixed signals from fiscal Q2 results could limit ADP’s ability to break out of its recent trading range, affecting investor returns - this impacts equity investors and the broader market sector exposed to payroll and HR services.
  • Investor caution despite positive earnings suggests market sentiment may not immediately reward upside surprises, introducing short-term volatility risk for ADP shares - relevant to traders and portfolio managers.
  • Potential economic or market deterioration may shift demand dynamics, though ADP’s defensive characteristics could mitigate downside - this risk primarily concerns the payroll processing and business services sectors.

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