02:08 PM EST, 12/20/2024 (MT Newswires) -- Paychex ( PAYX ) slightly exceeded fiscal Q2 revenue expectations on the back of higher interest income on client funds despite challenges from Employee Retention Tax Credit impacts, RBC Capital Markets said in a note emailed Friday.

Despite the headwinds, Paychex ( PAYX ) effectively managed costs and improved operating margins through expense control and strategic investments in global operations, the investment firm said.

Demand, customer retention and mid-market Human Capital Management sales are expected to drive accelerating Management Solutions growth as ERTC-related issues subside, RBC analysts noted.

Improved optimism among small businesses, as shown by the rise in the Small Business Optimism Index, points to a supportive environment for Paychex's ( PAYX ) services, RBC said.

RBC has a sector perform rating for Paychex ( PAYX ) with a $148 price target.

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