Automatic Data Processing (ADP) is likely to post in-line fiscal Q1 results on improved bookings momentum and revenue growth despite soft employment, RBC Capital Markets said.

There is potential upside to the employer services and professional employer organization revenue growth estimates, supported by stable pay-per-control, retention, and Worksite Employees growth, as well as sustained momentum from fiscal Q4. The company will likely reaffirm its fiscal 2026 guidance, according to the note Monday.

RBC said it models a Q1 EPS of $2.42 on revenue growth of nearly 6% to $5.12 billion. For full-year fiscal 2026, it expects EPS of $10.94 on revenue growth of 5.6% to $21.72 billion.

On pricing, Automatic Data Processing does not expect a major impact on revenue from pricing adjustments in its midterm forecast and maintains a long-term approach centered on client lifetime value rather than aggressive price increases. Adjustments are expected to align with recent levels rather than the higher increases seen during the pandemic, the brokerage said.

The company is prioritizing offerings such as Lyric, Workforce Software, and Embedded Payroll to sustain growth, while monitoring AI's impact on employment trends and macro-driven softness in hiring. Automatic Data Processing's pipeline remains robust heading into fiscal 2026, according to the note.

RBC has a sector perform rating on the stock with a price target of $315 per share.

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