Paycom Software Inc. (PAYC) shares are set for a sharp decline, plummeting 7.49% in pre-market trading on Thursday. This significant drop comes on the heels of the company's disappointing third-quarter earnings report and a wave of analyst downgrades.

The human capital management software provider reported adjusted earnings per share of $1.94 for the quarter ended September 30, narrowly missing the analyst consensus estimate of $1.95. While this represents a 16.17% increase from the same period last year, the slight miss has clearly unsettled investors. Revenue for the quarter came in at $493.3 million, marginally beating expectations but showing a deceleration in growth to 9% year-over-year, down from 11% in the previous year.

Following the earnings release, several prominent financial institutions have cut their price targets for Paycom stock. Mizuho reduced its target from $220 to $180, while Jefferies lowered its projection from $225 to $190. BMO Capital, JP Morgan, UBS, Stifel, TD Cowen, and Barclays have all followed suit with significant reductions in their price targets. These downgrades reflect growing concerns about Paycom's ability to maintain its growth trajectory in an increasingly competitive market, especially as businesses tighten their budgets for HR and payroll software amid economic uncertainties. The collective action by analysts has further fueled the pre-market sell-off, setting the stage for a challenging trading session for Paycom.