TD Cowen Trims ADP Target to $208 Ahead of Q3, Maintains Hold

Automatic Data Processing, Inc. (NASDAQ:ADP) is included among the 14 Cheap DRIP Stocks to Buy Now.

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On March 31, TD Cowen lowered its price recommendation on Automatic Data Processing, Inc. (NASDAQ:ADP) to $208 from $255. It reiterated a Hold rating on the stock. The firm said it had updated its model to reflect changes in Fed Funds rate expectations, foreign exchange, and its positioning ahead of Q3 results.

A few days earlier, on March 27, Wells Fargo also reduced its price goal on ADP to $214 from $262 while keeping an Underweight rating. The firm pointed to compression in comparable group multiples as the reason for the adjustment.

During the Q2 2026 earnings call, Chief Financial Officer Peter Hadley said the company was raising its fiscal 2026 consolidated revenue outlook to about 6% growth. He added that the adjusted EBIT margin expansion forecast remained unchanged at 50 to 70 basis points. He also said the company was increasing its adjusted EPS growth outlook to between 9% and 10%, noting that share repurchases would help support that growth.

Hadley noted that the Employer Services segment is now expected to deliver around 6% revenue growth for the full year. For the PEO segment, he said revenue growth is still expected to fall in the 5% to 7% range. Excluding zero-margin pass-throughs, PEO revenue is projected to grow between 3% and 5%. He also said the effective tax rate is expected to be around 23% for the year. Hadley reiterated that the company is maintaining its guidance for new business bookings growth at 4% to 7% for fiscal 2026.

Automatic Data Processing, Inc. (NASDAQ:ADP) provides cloud-based human capital management solutions and operates through two segments: Employer Services and Professional Employer Organization.

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