Overview
Cantor Fitzgerald opened coverage on Automatic Data Processing (NASDAQ: ADP) with an Overweight recommendation and set a price objective of $306.00, which corresponds to an approximate 18.5% upside from the current quoted level of $258.17. The research note emphasizes ADP’s strategic move away from traditional payroll toward expanded human capital management services and professional employer organization solutions, which the firm views as key to longer-term revenue expansion and improved client retention.
Growth drivers and recent performance
The research brief singles out ADP’s portfolio shift as the central catalyst for future growth. InvestingPro classifies ADP as a major participant in the Professional Services industry and records 7.1% revenue growth over the most recent twelve-month period. Cantor Fitzgerald argues that this repositioning provides a runway for recurring revenue and deeper customer relationships.
Valuation and market positioning
Cantor Fitzgerald noted that ADP’s present price-to-earnings multiple sits at roughly 21 times, a level the firm describes as having pulled back by about 900 basis points to a 10-year low. The report suggests that much of the market’s concern about macro deterioration and artificial intelligence-related pressures is already reflected in current market pricing, creating what the firm considers an attractive entry point. Separately, InvestingPro data shows ADP trading at a P/E of 25.48 and near its 52-week low, with fair value calculations indicating the stock is slightly undervalued.
Income profile and cash management
InvestingPro data cited in the research highlights a long dividend history, noting that ADP has increased its dividend for 27 consecutive years and currently yields 2.63%. Cantor Fitzgerald also pointed to ADP’s laddered client funds portfolio, which the firm believes is positioned to benefit while reinvestment rates remain above the average yield of maturing securities, even as the Federal Reserve has adopted a more dovish stance on interest rates.
Price target methodology and financial metrics
The $306 price target is derived from applying a 24x multiple to Cantor Fitzgerald’s calendar year 2027 earnings-per-share estimate of $12.38, combined with a discounted cash flow analysis. The report also references several financial health metrics: InvestingPro assigns ADP an overall Financial Health Score of 2.62, characterizing the company as operating with a moderate level of debt, and the stock’s beta of 0.86 suggests lower historical volatility relative to the broader market.
Corporate actions and shareholder returns
ADP has announced a new $6 billion share repurchase program, replacing a prior $5 billion authorization from 2022. The company continued to report approximately 403 million common shares outstanding as of December 31, 2025. In addition, ADP’s board declared a regular quarterly dividend of $1.70 per share, payable on April 1, 2026, to shareholders of record as of March 13, 2026.
External analyst movement and labor data
In separate analyst coverage, BMO Capital trimmed its price target for ADP to $288 from $301 but retained a Market Perform rating, citing lower multiples among comparable companies. Meanwhile, the ADP National Employment Report Pulse indicated that, for the four-week period ending January 3, 2026, U.S. private employers added an average of 7,750 jobs per week, a figure the report frames as a continued moderation in employment growth.
Risks and caveats
Cantor Fitzgerald’s coverage does include a list of potential downside catalysts it believes investors should weigh. Those risks include macroeconomic slowdown, legal and regulatory changes, the impact of declining interest rates on certain yields, elevated insurance costs, and competition from new market entrants. The research note also stressed that changes in these factors could alter the investment case.
Where investors can find more analysis
The research references InvestingPro tools and fair-value calculations as supplemental resources for investors seeking additional quantitative context, and it indicates that more detailed research is available via InvestingPro’s Pro Research Reports.
Summary
Cantor Fitzgerald initiated coverage of ADP with an Overweight rating and a $306 target, highlighting the company’s strategic shift into HCM and PEO services, a multi-decade dividend growth record, and balance-sheet characteristics that the firm deems supportive. The target reflects a 24x multiple on 2027 EPS of $12.38 plus DCF analysis, while the firm lists several macro and company-specific risks that could impede the thesis.