10 Best Beaten Down Software Stocks With the Highest Upside Potential

6. Paylocity Holding Corporation (NASDAQ:PCTY)

Jared Levine from TD Cowen reaffirmed a Buy rating on Paylocity Holding Corporation (NASDAQ:PCTY) on February 5. However, he lowered the firm’s price target on the stock from $188 to $178. The firm’s revised price target suggests a further 74.5% upside from the current levels. According to the firm, the company’s second-quarter results were impressive. Q2 performance highlighted that the company’s low valuation and strong position in AI offer an attractive entry point for investors. The company continues to be TD Cowen’s top pick in HCM.

Paylocity Holding Corporation (NASDAQ:PCTY) reported its second-quarter fiscal 2026 results on February 5. For the second quarter, adjusted EBITDA reached $142.7 million with an adjusted EBITDA margin of 34.3%. This exceeded the high end of the company’s guidance by $7.2 million, leading to an increase in its margin outlook for FY 2026. GAAP gross profit came in at $282.1 million. Net income for the quarter was $50.2 million, while operating income totalled $70.4 million. Free cash flow margin was approximately 24% over the last 12 months. The company bought back about 690,000 shares for approximately $100 million during the quarter. Under its share repurchase program, it still has $400 million available.

Following the results, PCTY raised its fiscal 2026 revenue outlook. The company now expects total revenue in the range between $1.732 billion and $1.742 billion. Recurring and other revenue guidance was also raised and is projected to be $1.620 billion to $1.630 billion.

Paylocity Holding Corporation (NASDAQ:PCTY) offers cloud-based human capital management, spend management solutions, and payroll software. It serves the workforce across the United States. The company also provides client services, implementation & training, and tax and regulatory services.