Paycom Software's (PAYC) growth outlook is constrained by a payroll-heavy revenue mix and modest upsell potential, BofA Securities said Tuesday in a report.

The introduction of products that integrate AI into its offerings plays to Paycom's strength, though concerns around data control may limit how broadly it can connect with external AI models, the report said.

BofA forecasts Paycom's three-year annual revenue growth broadly in line with consensus expectations at around 8%.

Paycom's "solid" operating margin of 74% is positive, though the benefit has already been priced into the stock, the report said.

BofA reinstated coverage of Paycom with an underperform rating and a $200 price target.

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