Should you take profits on Paychex shares now or wait?

The actions of Paychex (NASDAQ:PAYX) surged after posting strong second-quarter fiscal 2022 numbers last month. However, the stock has seen a correction in recent weeks quite in line with other stocks including ADP, Paycom and Workday. Investors had been bullish on the stock in 2021 as the company’s management has continuously raised its revenue forecast for fiscal 2022 due to customer growth and improving market conditions. The company expects total revenue growth of 10-11% in fiscal 2022, which is higher than the 7-9% seen historically. However, Paychex revenue increased by only 1% in fiscal year 2021 due to high unemployment. Given the high likelihood that Paychex’s revenue will grow at historic rates in the coming years, Trefis believes the stock is overvalued. Interestingly, our machine learning engine expects the stock to see a short-term bounce, indicating a sell strategy after a short holding period. See our analysis Paychex Stock Rising Chance for more details.

Five days: PAYX -3.2%, vs. S&P 500 -0.7%; Underperforming market (8% probability of event)

  • Paychex stock was down -3.2% over a five-day trading period ending 01/13/2022, compared to the broader market (S&P500) which was down -0.7% on the same period.
  • Returns of -3.2% or less over a 5-day period 202 times out of 2517 (8%); Stock increased over the next five days in 120 of these 202 cases (59%)

Ten days: PAYX -7.2%, vs. S&P 500 -2.4%; Underperforming market (3% probability of event)

  • Paychex stock is down 7.2% over the past ten trading days (two weeks), compared to the broader market (S&P500) which is down 2.4%.
  • Returns of -7.2% or less over a 10-day period 68 times out of 2,516 (3%); Stock rose over the next 10 days in 41 of those 68 instances (60%)

Twenty-one days: PAYX 3.4%, vs. S&P 500 0.3%; Market outperformed (37% probability of event)

  • Paychex stock has gained 3.4% over the past twenty-one trading days (about a month), versus the broader market (S&P500) which is up 0.3%.
  • Returns of 3.4% or more over a 21-day period 942 times out of 2515 (37%); Stock increased over the next 21 days in 610 of those 942 instances (65%)

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