Cantor Fitzgerald has revised down its price target for Paycom Software (NYSE: PAYC), lowering it from $170.00 to $135.00 while keeping a Neutral rating on the shares. The stock's most recent market price of $133.11 sits close to the firm's new target and near Paycom's 52-week low, after a decline of more than 40% over the past six months.
In its note, Cantor Fitzgerald expects Paycom's fourth-quarter revenue to come in roughly in line with consensus. The firm also anticipates that EBITDA could modestly surpass expectations, a result Cantor links to the company's October reduction in force. That workforce reduction involved about 500 employees, a move the analyst sees as providing some near-term cost relief and supporting slight EBITDA upside versus consensus levels.
Investors will be focused on Paycom's upcoming earnings report scheduled for February 11. One key metric under scrutiny is the company's historically high gross profit margin; Cantor Fitzgerald flagged Paycom's 86.79% gross profit margin as a figure market participants will watch to see if it holds through the quarter.
At the same time, the research firm pointed to discussions within the industry that indicate intense competition amid soft demand conditions. Cantor said those dynamics are likely to constrain potential upside to Paycom's fourth-quarter top-line results, limiting the scope for revenue surprises despite the firm's neutral bias.
From a fundamentals perspective, Paycom retains an overall "GOOD" rating from InvestingPro, a designation that Cantor referenced to underline the company's solid financial footing. That rating is supported by minimal debt on the balance sheet and robust cash flow generation, factors that the analyst view as positive for financial flexibility.
Visible Alpha's consensus estimates, according to Cantor Fitzgerald, line up with implied guidance that assumes roughly 10% growth in the Recurring & Other revenue categories. On the profit side, fourth-quarter consensus EBITDA sits at $232 million with a margin of about 42.7%, benchmarks Cantor notes when framing potential upside from cost reductions.
Recent company results and broker commentary add context to Cantor's revision. Paycom reported third-quarter 2025 earnings that marginally missed per-share expectations, posting EPS of $1.94 versus a $1.95 forecast. Revenue for that quarter slightly exceeded projections, reaching $493.3 million against an anticipated $492.92 million.
Following those third-quarter results, Needham reiterated a Hold rating on Paycom, pointing to the firm's solid performance and what Needham described as accelerating recurring revenue growth. Needham further flagged that Paycom's fourth-quarter guidance implies modest sequential acceleration in revenue, a development the firm views as a positive indicator for trends entering 2026.
Meanwhile, BMO Capital adjusted its price target lower as well, trimming it from $190.00 to $175.00 and maintaining a Market Perform rating. BMO attributed its decision to a recent contraction in software multiples over the past month, a market movement that influenced its valuation outlook for Paycom.
Taken together, the analyst actions and company results sketch a cautious picture: Paycom is judged financially healthy by some metrics, yet faces competitive and market valuation pressures that have driven several brokers to pare targets and adopt conservative ratings. With the company scheduled to report again on February 11, market participants will be looking for confirmation that margins, recurring revenue growth, and cost initiatives are tracking management's guidance.
Key points
- Cantor Fitzgerald cut its Paycom price target to $135 from $170 and maintained a Neutral rating.
- Fourth-quarter revenue is expected to be in line with forecasts; EBITDA could slightly beat due to an October reduction in force of roughly 500 employees.
- Other broker moves include Needham's Hold and BMO Capital's target reduction to $175, reflecting mixed sentiment and valuation pressures in the software sector.
Risks and uncertainties
- Competitive intensity in a soft-demand environment could cap Paycom's top-line growth - a risk for the software and HR technology sectors.
- Valuation multiple contraction in the broader software market, cited by BMO, introduces downside risk to price targets and investor returns in the sector.
- Execution risk around maintaining high gross margins and realizing cost-savings from workforce reductions could affect near-term profitability metrics.