Automatic Data Processing's (ADP) near-term upside appears limited as investors weigh employment durability, pays-per-control trends, and bookings execution, Morgan Stanley said Thursday in a report.

Fiscal Q2 results on Wednesday came in modestly ahead of expectations, helped by foreign exchange and float benefits that supported revenue growth, the report said. Excluding those items, employer services revenue was slightly better than expected, Morgan Stanley said.

Investor concerns about cyclical and potential structural headwinds in employment, including the impact of AI on hiring and workforce realignment related layoffs, are likely to persist, the report said.

Morgan Stanley lowered its price target on ADP stock to $274 from $311 and maintained its equal-weight rating.

Price: 249.81, Change: -0.88, Percent Change: -0.35