Shares Of Paychex Fall After 1Q Earnings Drop

HARTFORD, Conn. (AP) — Shares of Paychex Inc. fell Thursday, a day after the payroll and personnel services provider posted a 17 percent drop in its fiscal first-quarter profit.

Deutsche Bank analyst Christopher Mammone said Paychex's success ultimately will depend on falling unemployment.

"This continued top-line pressure in payroll revenues supports our view that despite some signs of stabilization in underlying metrics, we are unlikely to see a meaningful turn in business as long as unemployment continues to rise and firms refrain from adding permanent staff," he said in a client note.

Shares fell $1.88, or 6 percent, to $29.16 in afternoon trading.

Year-over-year revenue comparisons continued to weaken, but key measurements such as checks per client and new business starts are showing signs of stabilization, Mammone said.

Still, Paychex shares have risen more than 50 percent since early March, which Citi Investment Research analyst Ashwin Shirvaikar said captures the Rochester, N.Y., company's "fundamental strength and the expected improvement in key client metrics."