CS First Boston upgraded Ceridian (CEN ) to buy from neutral.
Analyst Joshua Rosen says the payroll processing company has a favorable risk/reward profile at current levels. He thinks the weak macro environment has masked operational improvements made by the company over the last couple of years. Rosen says despite having more operating leverage to improving the economy than payroll peers, the stock has lagged since mid-March.
Rosen says Ceridian has risen 15%, vs. a 20% rise for Automatic Data Processing, and a 25% for Paychex. He says valuation is attractive, currently embedding about 8% profit growth over the next three to five years, which is low relative to peers. Rosen raised the 93 cents 2004 earnings per share estimate to 96 cents. He upped the $17 target to $19.