KeyBanc Capital Markets has revised down its target price for Paycom Software (NYSE:PAYC) to $195.00, from a prior $250.00, while leaving its rating on the shares at Overweight. The new target still implies meaningful upside relative to Paycom's most recent trade near $118.71, even as the shares have slid roughly 45% over the past six months and hover close to a 52-week low of $116.83.
The brokerage's update follows Paycom's fourth-quarter results for 2025, a quarter KeyBanc described as "slightly better." In that period the company showed headway on several operational fronts: customer retention improved, client count growth accelerated, and the firm expanded its sales capacity. Paycom also sustained very high gross profit margins, reported at 86.79%, and entered the period with a balance sheet containing more cash than debt.
Despite those positives, KeyBanc highlighted the company's initial guidance for recurring revenue growth in 2026 at 7.5% as a central concern. That figure would mark a notable slowdown from the 11.3% growth recorded at the end of the fourth quarter. KeyBanc labeled the guidance conservative, suggesting management may be factoring caution into forecasts after a recent change in sales leadership.
The firm said it remains constructive on Paycom's ability to improve execution and capture upside in revenue through 2026, but the lowered price target reflects the recent valuation contraction in the shares and the more muted growth outlook embedded in management's guidance.
Paycom's reported fourth-quarter 2025 earnings met street expectations on the bottom line, with diluted earnings per share of $2.45. Revenue for the quarter came in slightly above forecasts at $544.3 million. However, the company's 2026 revenue guidance drew attention from analysts and investors.
Management projected total revenue of $2.185 billion for 2026, equivalent to 6.5% year-over-year growth. That outlook trails consensus projections, which anticipated roughly 8.5% growth and revenue near $2.225 billion. The initial guidance midpoint therefore sat about 220 basis points below consensus estimates, a gap that helped prompt a range of market reactions.
In the wake of these results and the guidance, Needham maintained a Hold rating on Paycom, pointing to the modest growth profile implied by the company's 2026 outlook. Market participants are weighing the company's solid margin profile and balance sheet strength against the lower-than-expected revenue trajectory that management set for the coming year.
Overall, the narrative from sell-side coverage is mixed: analysts note operational improvements in the most recent quarter but remain cautious about the softer recurring revenue growth that management has signaled for 2026. KeyBanc's move to lower the price target encapsulates that balance of optimism on execution and concern about near-term top-line momentum.
What remains clear from the reported results:
- Paycom delivered a quarter that contained tangible operational improvements while keeping profitability metrics strong.
- Management's 2026 revenue guidance is materially below consensus, introducing near-term uncertainty about growth.
- Analyst reactions vary, with at least one firm maintaining a Hold rating and KeyBanc keeping an Overweight stance despite reducing its price target.