ADP Earnings: Payroll Powerhouse Benefits From Resilient Retention and Interest Income Upside

We maintain our $228 fair value estimate for wide-moat ADP following a sound third-quarter result. Amid a backdrop of challenging macroeconomic conditions and a series of high-profile layoffs, ADP continues to benefit from sticky clients—which underpins our moat rating—and a large, diversified client base. ADP’s exposure to multiple sectors, market segments and geographies allowed the firm to more than offset layoffs at enterprise clients with strong demand elsewhere, including from the small business market fueled by elevated new business formation. At current prices, ADP shares screen as fairly valued relative to our unchanged valuation.