In a report published Friday, Bank of America analyst Sara Gubins reiterated a Buy rating on Automatic Data Processing (NASDAQ: ADP), and raised the price target from $90.00 $95.00.
In the report, Bank of America noted, “In April, ADP's Board approved the spin-off of Dealer Services to shareholders,with plans to close by early October (see our 4/10/14 note). ADP has a long history of taking corporate actions to unlock value (e.g., Taxware sale in 2012, Broadridge spin-off in 2007, Claims Services/Solera sale in 2006). Comparable valuations for industry-specific SaaS firms are above ADP's own valuation, suggesting the spin-off may unlock value for Dealer Services. At the same time, the spin is likely to draw increased attention to ADP's human capital management (HCM) software offerings.”
Automatic Data Processing closed on Thursday at $82.43.
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