NEW YORK (AP) — Shares of Paychex Inc. fell before Tuesday's opening bell after disappointing revenue from the payroll and employee services provider, highlighting several analysts' concerns about the company's ability to grow amid high U.S. unemployment.
For the fiscal first quarter ended on Aug. 31, revenue rose 3 percent to $578.2 million. Analysts polled by FactSet, on average, were expecting $584.3 million. Net income, which also grew 3 percent, edged past Wall Street's expectations.
The Rochester, N.Y., company also backed its profit guidance for the year, which was in line with analyst predictions.
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Citi analyst Ashwin Shirvaikar downgraded his rating on Paychex's shares to "Sell" from "Neutral." He said it appears that Paychex is on track to post another year of lackluster growth that can't justify its current share price. The stock has risen 17 percent since early June, he said.
Paychex is having a hard time finding new clients, and weak U.S. hiring is a concern, he said in a note to investors.
Jefferies analyst Jason Kupferberg also said Paychex's stock price was too high given the weak jobs outlook and "sluggish" environment for small businesses. He kept an "Underperform" rating on the stock.
Shares fell $1.23, or 3.6 percent, to $33.15 in premarket trading. The stock has gained 14 percent in 2012.
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