Paychex Acquires Flock to Drive Innovation

Paychex, Inc. (PAYX), a provider of integrated human capital management (HCM) solutions, announced the acquisition of San Francisco-based Flock, a provider of benefits enrolment and administration, onboarding, and human resources information systems (HRIS). Shares rose 1% on the news, closing at $118.04 on October 6. (See Paychex stock charts on TipRanks)

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Serving over 1.7 million worksite employees with best-in-class benefits administration experience, Paychex is one of the 30 largest insurance agencies in the U.S., empowering small and medium-sized businesses to focus on the growth and management of their business. Paychex’s HR solutions enable HR leaders to increase efficiency and automate tasks, ensuring smooth HCM processes.

Flock was launched over six years ago, helping employers simplify their workforce management process and assisting employees to better understand and select health insurance and benefits plans that best meet their needs.

Commenting on the deal, Martin Mucci, Paychex President, and CEO said, “The combination of Paychex’s full-service HR and benefits capabilities and Flock’s innovative platform will position us for continued growth and expansion in the marketplace.”

The company stated that the combination of Paychex’s HR software coupled with Flock’s benefits administration services will provide a complete package to employers, enabling them to efficiently manage and adapt to the evolving HR challenges brought about by the COVID-19 pandemic.

Recently, Robert W. Baird analyst Mark Marcon lifted the price target on the stock to $120 (1.7% upside potential) from $111 while maintaining a Hold rating.

The revision in the price target comes as a result of the better-than-expected first-quarter results reported by Paychex. Marcon is impressed by the improved key metrics, including retention, pays per control, and bookings, and has faith in the company’s solutions and service capabilities.

Overall, the stock has a Hold consensus rating based on 9 Holds and 2 Sell. The average Paychex price target of $116.55 implies 1.3% downside potential to current levels. Shares have gained 46.6% over the past year.