Wells Fargo Cuts Price Target on Automatic Data Processing (ADP), Flags Multiple Compression

Automatic Data Processing, Inc. (NASDAQ:ADP) is included among the 14 Safest Stocks with Highest Dividends.

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On March 27, Wells Fargo lowered its price recommendation on Automatic Data Processing, Inc. (NASDAQ:ADP) to $214 from $262. It reiterated an Underweight rating on the stock. The firm pointed to compression in comparable group multiples as the reason for the change.

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

The company also raised its Employer Services revenue growth outlook to roughly 6% for the full year. At the same time, it maintained its Professional Employer Organization revenue growth guidance in the 5% to 7% range. PEO revenue, excluding zero-margin pass-throughs, is expected to grow between 3% and 5%. Hadley said the effective tax rate is still expected to be around 23% for the year. He also reiterated that the company is keeping 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 (HCM) solutions. Its operations are organized into Employer Services and Professional Employer Organization segments.

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