Royal Bank of Canada Reduces Stake in Paychex by 17.7%

The Royal Bank of Canada has decreased its investment in Paychex, Inc. by 17.7%, as revealed in its latest filing with the Securities and Exchange Commission (SEC). The bank’s shareholding now stands at approximately 1,488,709 shares, following the sale of 320,235 shares during the first quarter of the year. This adjustment brings the bank’s ownership to roughly 0.41% of Paychex, valued at $229,678,000.

Other institutional investors have also recently adjusted their stakes in Paychex. For instance, Quarry LP acquired a new stake worth approximately $34,000 during the first quarter. Additionally, Twin Tree Management LP increased its position by 33.7%, now holding 15,647 shares valued at $2,414,000 after acquiring an additional 3,947 shares. Notably, Connecticut Wealth Management LLC and Vident Advisory LLC also initiated new positions, valuing approximately $229,000 and $6,457,000, respectively.

Institutional investors collectively hold 83.47% of Paychex’s shares, indicating significant institutional interest in the company.

Recent Insider Transactions

In related news, Paychex’s Chairman, Martin Mucci, sold 97,526 shares on July 10, 2023, at an average price of $145.17. The total transaction amounted to $14,157,849.42, reducing his ownership to 446,917 shares, now valued at approximately $64,878,940.89. This sale represents a 17.91% decrease in his stake.

Moreover, CEO John B. Gibson sold 12,370 shares on July 16, 2023, generating $1,755,550.40. Following this transaction, he retains 81,755 shares valued at around $11,602,669.60, reflecting a 13.14% decrease in his ownership. Currently, 11.40% of Paychex’s stock is held by insiders.

Financial Performance and Market Outlook

Paychex recently released its quarterly earnings on June 25, 2023, reporting earnings of $1.19 per share, which met analysts’ expectations. The company generated revenue of $1.43 billion, surpassing the consensus estimate of $1.38 billion. With a net margin of 29.75% and a return on equity of 45.01%, Paychex demonstrated robust financial health. Last year, the company reported earnings of $1.12 per share during the same quarter.

For the current fiscal year, analysts predict Paychex will achieve earnings of $4.99 per share.

Additionally, Paychex declared a quarterly dividend of $1.08 per share, which was paid to shareholders of record on July 21, 2023. This dividend reflects an annualized total of $4.32 and a yield of 3.1%, with a payout ratio of 94.53%.

Recent research reports provide a mixed outlook for Paychex. Stifel Nicolaus revised its price target from $156.00 to $152.00 and maintained a “hold” rating. BMO Capital Markets initiated coverage with a “market perform” rating and a target of $160.00. Meanwhile, JPMorgan Chase & Co. increased its target from $148.00 to $153.00 but assigned an “underweight” rating. Citi and Morgan Stanley have also lowered their targets, now set at $148.00. Overall, the stock currently holds a consensus rating of “Reduce” with a target price averaging $149.70.

About Paychex

Paychex, Inc., along with its subsidiaries, offers comprehensive human capital management solutions tailored for small to medium-sized businesses across the United States, Europe, and India. The services include payroll processing, tax administration, employee payment solutions, and regulatory compliance, ensuring businesses meet their obligations effectively.

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