PAYC Should I Buy
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Paycom Software Inc (PAYC) is not a strong buy at the moment for a beginner investor with a long-term strategy. The stock is currently in a bearish trend, with weak technical indicators, cautious analyst sentiment, and a disappointing 2026 growth outlook. While hedge funds are significantly increasing their positions, and the company has shown modest financial growth, the lack of strong positive catalysts and the pre-market price decline suggest waiting for better entry points.
The technical indicators suggest a bearish trend. The MACD is negative and contracting, RSI is neutral at 21.355, and the moving averages (SMA_200 > SMA_20 > SMA_5) confirm a bearish setup. The stock is trading below key pivot levels, with support at 110.91 and resistance at 123.551.
Hedge funds are significantly increasing their positions, with a 730.22% increase in buying activity over the last quarter.
A Forrester Consulting study highlighted a potential 431% ROI from Paycom's IWant product, showcasing its value proposition.
The company reported modest YoY growth in Q4 2025 financials, with revenue up 10.23% and EPS up 2.48%.
Analysts have broadly lowered their price targets, reflecting concerns over Paycom's 2026 guidance and competitive pressures.
The pre-market price is down 3.01%, indicating weak sentiment.
Options data shows bearish sentiment, with a high put-call volume ratio of 3.
The company's 2026 revenue guidance of 7-8% growth is below market expectations, raising concerns about future performance.
In Q4 2025, Paycom reported revenue of $544.3 million, up 10.23% YoY, and net income of $113.8 million, up 0.21% YoY. EPS increased by 2.48% YoY to $2.07, and gross margin improved to 83.87%. While these figures show modest growth, the cautious 2026 guidance dampens the outlook.
Analysts have lowered their price targets significantly, with targets now ranging from $115 to $183. Ratings are mixed, with some maintaining Buy or Outperform ratings, while others remain Neutral or Hold. Concerns include a disappointing 2026 growth outlook, competitive pressures, and a softening demand environment.
