ADP Stock Forecast & Price Target

ADP has demonstrated strong performance in its employer services segment, with new business bookings growth of approximately 7% in the fourth quarter of FY24, aligning with its strategic guidance. Revenue growth of about 6.5% year-over-year was driven by robust performance in the professional employer organization (PEO) sector and interest on client-held funds, reinforcing ADP's competitive position in payroll and human capital management solutions. The company’s focus on technological innovation, including the rollout of Gen AI-powered services and significant increases in client adoption of Next Gen platforms, positions ADP well for future growth amid favorable market conditions and a stable earnings outlook.

Automatic Data Processing (ADP) is facing challenges reflected in its FY25 new business bookings guidance of only 4-7%, significantly lower than the 7% growth previously experienced in FY24, influenced by a decline in client revenue retention attributed to higher small business closures and slower economic growth. Additionally, the company anticipates a reduction in client retention by 30-10 basis points year-over-year, alongside a projected decline in Professional Employer Organization (PEO) margins, raising concerns about continued profitability under current market conditions. Furthermore, the overall economic environment, marked by broad-based hiring slowdowns and layoffs, poses significant risks to ADP's future growth, leading to expectations of potential downside revisions in earnings per share estimates.