ADP Earnings: Robust Demand and Sticky Clients Despite Near-Term Macro Headwinds; Fair Value Up 7%

We've raised our fair value estimate for wide-moat ADP by 7% to $244 per share to reflect an improved profitability outlook as well as the time value of money upon our model roll following a strong finish to fiscal 2023. Despite challenging macroeconomic conditions, the firm continues to enjoy robust demand across a broad suite of payroll and human resources outsourcing solutions, resilient client retention, and healthy—albeit moderating—employment growth within its client base. The shares currently screen as fairly valued relative to our updated valuation.