Brown Capital Management LLC has significantly reduced its investment in Automatic Data Processing, Inc. (NASDAQ: ADP), decreasing its stake by 75% during the second quarter of 2023. According to a recent filing with the Securities and Exchange Commission (SEC), the firm now holds just 1,143 shares of the business services provider after selling off 3,425 shares. The remaining holdings are valued at approximately $353,000.
Several other institutional investors have also adjusted their positions in Automatic Data Processing. Notably, Activest Wealth Management increased its stake by an impressive 2,600% during the first quarter, now owning 81 shares valued at $25,000 after acquiring an additional 78 shares. Mid American Wealth Advisory Group Inc. and Harbor Asset Planning Inc. both entered new positions during the second quarter, each valued around $26,000. Westside Investment Management Inc. also increased its holdings by 80%, bringing its total to 90 shares worth $28,000. Currently, institutional investors collectively own 80.03% of Automatic Data Processing’s stock.
Analyst Insights and Market Performance
Automatic Data Processing has been in the spotlight of various analysts recently. On October 30, 2023, JPMorgan Chase & Co. reduced its price target for the company from $340.00 to $295.00, assigning an “underweight” rating. Similarly, Wells Fargo & Company lowered its price target from $288.00 to $272.00 with the same rating.
Weiss Ratings downgraded Automatic Data Processing from a “buy (B-)” to a “hold (C+)” rating. Conversely, Dbs Bank upgraded its rating to “hold” on August 21, 2023. Citigroup also initiated coverage, issuing a “neutral” rating with a target price of $303.00. Presently, two analysts rate the stock as a Buy, ten as Hold, and two as Sell. According to data from MarketBeat.com, the consensus rating is “Hold” with an average target price of $312.67.
Insider Activity and Financial Performance
In addition to the institutional shifts, insider trading has also been notable at Automatic Data Processing. Vice President Christopher D’Ambrosio sold 597 shares on September 10, 2023, at an average price of $296.90, resulting in a transaction value of approximately $177,249.30. Following this sale, D’Ambrosio holds 10,541 shares valued at around $3,129,622.90. Another vice president, Michael A. Bonarti, sold 8,728 shares on September 9, 2023, for a total of approximately $2,604,697.04. After this sale, Bonarti retains 80,531 shares, worth around $24,032,866.33. Company insiders currently hold about 0.20% of the stock.
On the financial front, Automatic Data Processing reported earnings on October 29, 2023, announcing earnings per share (EPS) of $2.49, surpassing analysts’ expectations of $2.44 by $0.05. The company generated revenue of $5.18 billion, slightly exceeding the projected $5.14 billion. The company’s net margin stands at 19.79% with an impressive return on equity of 70.63%. Year-over-year, quarterly revenue increased by 7.1%, up from $2.33 EPS in the same period last year.
In a positive development, Automatic Data Processing announced an increase in its quarterly dividend, set to be paid on January 1, 2024. Shareholders of record on December 12, 2023 will receive a dividend of $1.70 per share, up from the previous $1.54. This equates to an annualized dividend of $6.80 and a yield of 2.6%. The company’s payout ratio is recorded at 60.81%.
Automatic Data Processing, Inc. is a global provider of cloud-based human capital management solutions, operating through two segments: Employer Services and Professional Employer Organization (PEO). The company continues to adapt to market demands and investor expectations in an ever-evolving business landscape.
