Paylocity expansion beyond payroll backs Bank of America "buy"

What Brokers Say Tech Edited by: Angela Harmantas 15:12 Tue 29 Sep 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Paylocity expansion beyond payroll backs Bank of America "buy" Published: 15:12 29 Sep 2026 EDT Paylocity Holding Corp (NASDAQ:PCTY) can grow faster than the market expects, Bank of America said as it reinstated coverage with a "buy" rating and a $175 price target. The company's expansion into finance, IT, services and AI underpins that outlook, with the broker expecting product investments to help reaccelerate growth outside its core payroll business. Bank of America forecasts revenue growth of 10% in financial year 2027, compared with market expectations of 7%. The broker cited an average historical revenue beat of about 2.5% to argue that Paylocity can continue to outperform market expectations. Cross-selling, new products, share gains and higher interest rates could provide further upside over the next three years, it wrote. Its longer-term outlook combines sustainable revenue growth of 10% to 13%, versus 10% for peers, with potential improvements in cash generation. The broker expects free cash flow margins to rise from 24% toward a long-term goal of 30%, compared with 22% to 25% for peers. That growth and margin outlook supports a higher valuation, Bank of America wrote, with its target based on roughly 19 times estimated calendar-year 2027 free cash flow. Paylocity's current enterprise value is 16 times that forecast cash flow, already above the comparable software peer average of 15 times. The growth case rests partly on cross-selling new offerings, with management targeting 10% to 20% penetration and the broker anticipating faster revenue growth per user. The opportunity also extends to AI, where Bank of America sees buyer spending shifting from core payroll toward the broader employee lifecycle. It views sticky payroll systems, regulatory complexity, and customer skill gaps as defenses against AI disruption, although the commercial contribution remains unclear. The broker noted that AI interactions doubled quarter over quarter, with no sales contribution reported. Research and development spending at 15% of revenue, above peers, offers scope to broaden the platform, but the broker wrote that investment must deliver clear returns. Risks to the outlook include pricing pressure among midsize customers, interest rate cuts reducing float revenue, and integration and execution complexity. Continue reading