Paycom nabs Buy rating from Guggenheim in new coverage; Paylocity rated Neutral

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Guggenheim started coverage on Paycom Software (NYSE:PAYC [https://seekingalpha.com/symbol/PAYC]) with a Buy rating in a recent note, as analyst Jacob Smith sees the HR company benefiting from artificial intelligence.

"From a product standpoint, we believe PAYC is well positioned to capitalize on the AI era, backed by architectural advantages such as the single database foundation and a strong track record of innovation," Smith wrote to clients.

PAYC shares have underperformed [https://seekingalpha.com/symbol/IGV/charting?compare=IGV%2CSP500%2CPAYC&interval=YTD] the iShares Expanded Tech-Software Sector ETF (IGV [https://seekingalpha.com/symbol/IGV]) by about six percentage points so far this year, a dynamic that Smith said reflected "the all-encompassing AI narrative that it will replace workers and thereby directly impact software vendors that charge customers based on headcount."

While the analyst concurred with the broader view that the AI threat to Paycom's (PCOM) business model "is very real," he noted "the reality right now is we don’t know whatthe future holds and often times innovation and times of change create new industries and occupations to replace the ones that came before them."

In a separate note, Smith initiated coverage on fellow cloud-based human capital management provider Paylocity Holding (NASDAQ:PCTY [https://seekingalpha.com/symbol/PCTY]) with a Neutral rate, as it faces the same AI threat facing PCOM.

PAYC shares gained 1.3% in Friday morning trading, while PCTY edged up 0.3%.

MORE ON PAYCOM, PAYLOCITY

* Paycom Software, Inc. (PAYC) Presents At Citi's 2025 Global Technology, Media And Telecommunications Conference Transcript [https://seekingalpha.com/article/4819179-paycom-software-inc-payc-presents-at-citis-2025-global-technology-media-and]
* Paycom Software: Expecting Continued Growth Acceleration Ahead [https://seekingalpha.com/article/4815629-paycom-software-expecting-continued-growth-acceleration-ahead]
* Paycom: Well Positioned And Highly Competitive, But Growth Prospects Are Thinning [https://seekingalpha.com/article/4810624-paycom-well-positioned-and-highly-competitive-but-growth-prospects-are-thinning]
* Paycom Non-GAAP EPS of $2.06 beats by $0.28, revenue of $484M beats by $12.05M [https://seekingalpha.com/news/4480461-paycom-non-gaap-eps-of-2_06-beats-by-0_28-revenue-of-484m-beats-by-12_05m]
* Paylocity outlines 8% headcount growth and $1.7B revenue target for fiscal 2026 as new finance platform launches [https://seekingalpha.com/news/4479485-paylocity-outlines-8-percent-headcount-growth-and-1_7b-revenue-target-for-fiscal-2026-as-new]