UPDATE: Stifel Reiterates on Automatic Data Processing Following Management Meetings

In a report published Monday, Stifel analyst David Grossman reiterated a Buy rating on Automatic Data Processing (NASDAQ: ADP), and raised the price target from $82.00 to $88.00.

In the report, Stifel noted, “We recently traveled with CFO ADP Jan Siegmund and their IR team. Our meetings reinforced our positive investment thesis but more importantly increased our conviction in the longer term sustainability of the model. We continue to believe ADP can grow EPS 10-15%/yr into the foreseeable future through a combination of mid-high single digit revenue growth, 50bp annual margin expansion and share repurchase.

"Timing may be the biggest current challenge as we believe the market has already begun to discount the bottom of the current rate cycle. Consequently, we recommend opportunistic purchases of this stock with the aforementioned growth parameters in mind, a very defensible earnings stream plus an attractive dividend yield (2.4%, growing in line with EPS).”

Automatic Data Processing closed on Friday at $78.56.