Paychex's (PAYX) Professional Employer Organization revenue growth is expected to soften in fiscal Q4 due to timing dynamics but should reaccelerate in 2027, driven by high single-digit Worksite Employee growth, RBC Capital Markets said Wednesday in a note.

RBC expects 2027 revenue guidance of about 4.5% to 6% year-over-year, in line with RBC estimates and Street consensus of 5.6% and 5.4%, respectively.

The brokerage expects Paychex to guide operating margin expansion of nearly 25 to 50 basis points year-over-year, assuming a more normalized year of margin expansion, according to the note.

RBC said it anticipates aggressive buybacks with the $1 billion share repurchase authorization and dislocation in the stock price, delivering adjusted earnings per share growth guidance of 7% to 9%.

The brokerage is modeling fiscal Q4 total revenue growth of nearly 12.4% year-over-year to $1.6 billion, broadly in line with consensus and guidance of 12%. Its adjusted EPS estimate is $1.31, in line with consensus, the brokerage said.

RBC kept a sector perform rating on Paychex with a price target of $102.

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