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Valued at a market cap of $11.8 billion, Minneapolis, Minnesota-based Dayforce Inc (DAY) is a leading provider of human capital management (HCM) software solutions. Its cloud-based platforms, Dayforce and Powerpay, offer services such as payroll, workforce management, benefits, and talent intelligence for businesses globally.
Shares of the human resources software and services provider have underperformed the broader market over the past 52 weeks. DAY has risen 7.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.1%. In 2024, shares of DAY are up 11.4%, compared to SPX’s 24.1% gain on a YTD basis.
Zooming in further, DAY’s underperformance becomes more evident compared to the Fidelity Cloud Computing ETF’s (FCLD) 37.5% gain over the past 52 weeks and 22.9% return on a YTD basis.
Dayforce shares soared 7.3% on Oct. 30 due to its better-than-expected Q3 revenue of $440 million and adjusted EPS of $0.47. The company also reported a 19% year-over-year increase in recurring revenue, a significant 54% increase in operating cash flow, and a positive adjusted EBITDA outlook for the upcoming quarters. Additionally, Dayforce raised its full-year revenue guidance to $1.8 billion, further boosting investor confidence. The company’s share repurchase program and a strong product roadmap featuring new HR technology innovations also helped drive investor optimism.
For the current fiscal year, ending in December, analysts expect DAY’s EPS to grow 64.6% year-over-year to $1.07. The company’s earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 19 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” and eight Holds.”
This configuration is slightly more bullish than three months ago, with nine “Strong Buy” ratings on the stock.
On Nov. 14, KeyBanc raised its price target on Dayforce to $92 and maintained an “Overweight" rating. Despite slightly lowered recurring revenue growth expectations, the firm remains positive due to Dayforce's focus on profitability and progress toward its $1 billion free cash flow goal.
As of writing, DAY is trading below the mean price target of $82.94. The Street-high price target of $95, implies a potential upside of 27.1% from the current price.
