In August, Automatic Data Processing (ADP) was targeted by Bill Ackman’s Pershing Square in an effort to oust CEO Carlo Rodriguez and win three board seats. Since then, Pershing Square has failed to win a proxy contest.
We think some of the margin difference between ADP and peers is structural, and we don’t see easy fixes for some of the issues Pershing Square identified. We see the moat trend at ADP as clearly negative and view the stock as significantly overvalued.
Colin Plunkett, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.