BMO Capital on Wednesday cut its price target on Automatic Data Processing Inc. (NASDAQ:ADP) to $281.00 from $288.00, while retaining a Market Perform rating on the payroll processing firm.
The modest reduction in the target price follows ADP’s fiscal second-quarter results. BMO characterized those results as offering "mixed signals" that could be interpreted in either a bullish or bearish light, and said the ambiguity may hinder the stock’s ability to move decisively out of its current trading range in the near term.
After revising its financial model to reflect the quarterly report, BMO trimmed its target from $288 to $281. The new target is described as closely aligned with InvestingPro’s Fair Value assessment, and BMO noted that the current share price of $250.69 could imply the stock is slightly undervalued relative to that benchmark.
Despite the price target cut and cautious tone, BMO expressed a neutral stance toward ADP, saying it remained "comfortable on the sidelines for now." The firm also acknowledged ADP’s defensive qualities, suggesting those characteristics could prove helpful should macroeconomic or market conditions deteriorate.
Automatic Data Processing reported fiscal second-quarter results for 2026 that beat analyst expectations. The company posted earnings per share of $2.62 versus forecasts of $2.57, and reported revenue of $5.4 billion compared with an anticipated $5.34 billion. Even with those upside surprises, ADP shares moved lower in pre-market trading, a reaction BMO and market participants interpreted as indicative of investor caution.
BMO’s commentary highlighted the tension between the company’s solid near-term financial performance and market sentiment, while the earnings outcomes remain a central input for investors evaluating ADP’s financial health. The brokerage firm did not report any changes to its rating, and there have been no recent analyst upgrades or downgrades noted for ADP.
For investors and market observers, the development underscores a mix of positive fundamentals and tempered expectations: ADP’s reported EPS and revenues exceeded consensus estimates, yet valuation adjustments and the broker’s unchanged Market Perform view reflect continued caution.