Paycor Earnings: Sales Execution Woes and Near-Term Headwinds Weigh on Top-Line Outlook

We lowered our fair value estimate for no-moat Paycor to $21 per share from $26 following mixed third-quarter fiscal 2024 results, which once again fell short of our above-guidance revenue forecast but exceeded our profitability expectations. On reassessing the firm’s outlook, we have tempered our long-term client base growth assumptions as Paycor continues to ramp up sales capacity post elevated turnover, weighing on our top-line growth forecast and valuation. Relative to our updated fair value estimate, Paycor shares screen as fairly valued on a risk-adjusted basis, and we see better opportunities among our moatier payroll and human capital management software coverage.