ADP Downgraded to Underperform as Jefferies Flags Structural Headwinds

Automatic Data Processing, Inc. (NASDAQ:ADP) is included among the 14 Best Dividend Aristocrats to Invest in Heading into 2026.

On December 16, Jefferies analyst Samad Samana downgraded Automatic Data Processing, Inc. (NASDAQ:ADP) to Underperform from Hold and cut the price target to $230 from $245. The firm said it “thinks highly” of management, but described the company’s fundamental outlook as “shaky.” The analyst pointed to market saturation, larger and more scaled competitors, and falling interest rates as headwinds for growth in 2025. Jefferies said challenges are likely to build, adding that ADP’s medium-term targets look “difficult to achieve.”

In fiscal Q1 2026, Automatic Data Processing, Inc. (NASDAQ:ADP) reported solid results. Revenue rose 7%, and adjusted EPS also grew 7%. Management highlighted progress on key strategic priorities. The quarter included record sales volume, and the small business portfolio showed healthy growth. Employer Services HR Outsourcing picked up momentum again. Automatic Data Processing, Inc. (NASDAQ:ADP) noted that HCM demand remained relatively stable. There was a specific strength in ADP Lyric HCM.

ADP also announced the acquisition of Pequity, a compensation management software provider. Management said the deal expands ADP’s ability to support more complex compensation planning needs for its clients.

Automatic Data Processing, Inc. (NASDAQ:ADP), commonly known as ADP, is a global provider of cloud-based Human Capital Management solutions. Its services span payroll, HR, tax, talent, and benefits administration for organizations of all sizes.

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