J.P. Morgan Previews F4Q11 On PAYX

J.P. Morgan is maintaining its Underweight rating and its $32 price target on Paychex (NASDAQ: PAYX) as the company prepares to release its F4Q11 numbers tomorrow.

Says J.P. Morgan, in its report, “PAYX plans to report F4Q11 (May) results after the close on June 22 with a call on June 23 at 10:30 AM EST. We expect the results to be generally in line with consensus where we have less confidence in revenue than EPS upside. FY12 guidance will be key and we expect a lackluster outlook as the firm re-tools for growth under new management - for FY12 we forecast revenue growth of 7.7% (6.7% organic; consensus at 5.3%) and EPS of $1.49 (5.0% growth; consensus at $1.51), implying a NTM P/E of 20x (4% dividend yield) which seems full considering an uneven macro outlook. While expectations seem low (PAYX stock down 9% vs. ADP down 4% since ADP reported C2Q earnings), we remain UW the stock as we see little room for EPS and multiple expansion in near-term.”

PAYX closed yesterday at $29.97.