Automatic Data Processing's (ADP) investors will likely focus on Q4 bookings growth and the company's fiscal 2026 guidance, RBC Capital Markets said in a note emailed Monday.

The investment firm said that ADP is seeing strong pipelines heading into its biggest bookings quarter, but that will likely be partly offset by some softness in international bookings.

RBC is forecasting bookings growth of 5% to 6%, which would be at the midpoint of the company's 4% to 7% guidance range.

The investment firm also expects ADP to see pays per control growth of about 1%, while it expects client retention to decrease "modestly" by between 30 basis points and 10 basis points. Meanwhile, "higher for longer rates" are a positive indicator for ADP's client funds interest, the note said.

This scenario would back a 5% to 6% revenue increase as well as 8% to 10% earnings per share growth in fiscal 2026 which would be "modestly below mid-term guidance" but in line with Street estimates.

RBC also said that the "bar has been lowered" ahead of ADP's Q4 earnings after Paychex's (PAYX) results and ADP's investor day event. "In-line results and in-line FY26 guidance could serve as a near-term clearing event," the note said.

RBC has a sector perform rating on ADP and $315 price target.

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