Paychex shares fall 6 percent after disappointing 4Q

Paychex shares down after 4Q results fall short

DES MOINES, Iowa — Shares of Paychex Inc. fell 6 percent Thursday after fourth-quarter profit and revenue results missed analyst expectations.

Deutsche Bank Securities Inc. analyst Christopher Mammone maintained a “hold” rating and a price target of $23 on the payroll and personnel services company.

Shares were down $1.61, or 6 percent, at $15.10 in morning trading.

Mammone said the company missed slightly his fiscal year expectations, missing revenue by $5 million because of weaker payroll revenue. Profit results missed his estimate by 1 cent per share. He’s concerned most about the rapid slowdown in payroll revenue and indications that any recovery could be several quarters away.

Company guidance for 2010 calls for revenue to fall between 1 percent and 4 percent, while analysts expect a 1 percent increase, Mammone said.

Thomas Weisel Partners analyst David Grossman said fiscal year 2010 should represent a trough for earnings for the company. That, combined with 4.8 percent dividend yield, “should mitigate the downside in this stock,” he said.

Grossman said he expects to lower his previous $1.38 fiscal year 2010 earnings per share estimate by about 5 cents a share. He placed an “Overweight” rating on the stock and a 12-month price target of $31.

The Rochester, N.Y., company said on Wednesday it earned $113.8 million, or 32 cents per share, down 16 percent from $135.5 million, or 38 cents per share, in the same period a year earlier.

Revenue slid 4 percent to $495.9 million from $519.2 million.

Analysts, on average, were expecting a profit of 33 cents per share on sales of $510.5 million, according to a survey by Thomson Reuters.