ADP Price Target Lowered to $270 as AI Risks Loom

Key Moments

Stifel cut its price target on ADP (NASDAQ:ADP) to $270.00 from $280.00 while reiterating a Hold rating.
ADP shares are trading at $231.36, down more than 10% year-to-date and hovering near a 52-week low of $230.28.
ADP beat fiscal Q2 2026 EPS and revenue forecasts, even as its employment report showed a slowdown in U.S. private sector hiring.

Stifel Reassesses Valuation After AI Discussions

Stifel has lowered its price target on Automatic Data Processing Inc. (NASDAQ:ADP) to $270.00 from $280.00, while keeping a Hold rating on the human capital management provider. The revision comes with ADP stock trading at $231.36, more than 10% lower year-to-date and close to its 52-week low of $230.28, based on InvestingPro data.

The change follows a recent meeting between Stifel and ADP leadership, including the President of Global Product/Innovation and the Chief Financial Officer. The discussion focused on how artificial intelligence is influencing labor markets and ADP’s underlying business model.

Stifel indicated that AI is clearly a disruptive force, but argued that the market appears to be placing too much emphasis on potential downside risks, without giving sufficient weight to ADP’s specific competitive strengths and the opportunities that may emerge as the industry evolves.

AI-Driven Efficiency Gains Inside ADP

According to Stifel’s assessment, ADP is currently realizing its most significant internal efficiency improvements in two key areas: customer service and software development. These gains are being driven by the application of AI within the organization.

However, Stifel also noted that ADP has not yet seen evidence that AI is meaningfully affecting overall employment patterns among its client base. In other words, while AI is reshaping ADP’s internal processes, its broader impact on client employment trends has not yet materialized in a measurable way for the company.

Valuation Context and Risk/Reward View

The firm pointed out that ADP shares are trading at a 17% premium to the equal-weight S&P 500, which Stifel described as the lowest relative level since the financial crisis. This compares with ADP’s historical premium range of 50-60%.

Stifel believes this compressed premium offers an attractive risk/reward setup for investors, particularly given ADP’s track record of relatively stable high-single-digit to low-double-digit growth.

Metric	Current / Recent Level	Context
Stifel rating on ADP	Hold	Maintained
Stifel price target	$270.00	Down from $280.00
ADP share price	$231.36	Down over 10% year-to-date
52-week low	$230.28	Current price near this level
Premium to equal-weight S&P 500	17%	Below historical 50-60% range

Fiscal Q2 2026 Results Top Expectations

In other recent developments, ADP reported fiscal Q2 2026 results that surpassed analyst estimates. Earnings per share came in at $2.62, ahead of the consensus expectation of $2.57. Revenue was $5.4 billion, exceeding the projected $5.34 billion.

Despite this outperformance on both the top and bottom lines, ADP’s stock moved lower in pre-market trading following the release. The article did not specify the magnitude of the pre-market decline.

Fiscal Q2 2026 Metric	Reported	Forecast
Earnings per share (EPS)	$2.62	$2.57
Revenue	$5.4 billion	$5.34 billion

ADP Employment Data Signals Hiring Slowdown

The ADP National Employment Report provided additional color on the macro backdrop in which ADP operates. The report showed that the U.S. private sector added 22,000 jobs in January, indicating a slowdown in hiring activity.

Sector-level data revealed uneven performance:

Education and health services generated 74,000 new positions, leading job creation.
The manufacturing sector shed 8,000 jobs.
Professional and business services recorded the sharpest contraction, losing 57,000 positions.

These figures illustrate a cooling labor market with notable divergences across industries, framing the environment for ADP’s business and its AI-related strategy.