Paylocity (PCTY) stands to benefit from product investments, reaccelerating growth beyond core payroll systems, with disciplined capital allocation further creating a favorable risk-reward position on the company, BofA Securities said in a note Tuesday.

The investment firm said it expects fiscal 2027 revenue growth of 10%, above Wall Street expectation of 7%, although market share gains, new products, and higher interest rates could lift the topline beyond this base case over the next three years.

Additionally, Paylocity is expected to fend off the disruptive risk of artificial intelligence, owing to the "stickiness" of payroll systems, regulatory complexity, and skill gaps of its customer base, according to the note.

The firm said it sees a 10% to 13% sustainable revenue growth for the company over peers at 10%, with free cash flow margins moving toward a 30% long-term goal from 24%.

BofA Securities reinstated coverage of Paylocity stock with a buy rating and $175 price target.

Paylocity shares were down 1.8% in Tuesday trading.

Price: 140.13, Change: -2.60, Percent Change: -1.82