June 25 (Reuters) - Paychex Inc (PAYX.O) shares fell as much as 10 percent Thursday, a day after the payroll and human resources company posted a drop in quarterly profit and forecast a bleak 2010.
The results prompted at least two brokerages to cut their price targets on the stock.
On Wednesday, the company reported a 16 percent drop in fourth-quarter profit and said it sees 2010 net income falling 10 percent to 12 percent and sales dropping 1 percent to 4 percent. [ID:nN24218981]
Citigroup cut its price target on Paychex stock by $2 to $26 saying 2010 outlook was well below expectations. It kept its "hold" rating.
"Key metrics like client losses, checks/client and net pricing are still deteriorating, while lower tax withholding related to the stimulus also hurts," Citigroup analyst Ashwin Shirvaikar wrote in a note to clients.
S&P Equity Research, which cut its price target by $2 to $28, said it expects Paychex's payroll services revenue to decline over the next few quarters, after it fell in the fourth quarter for the first time in years.
Shares of the company, which competes with larger rival Automatic Data Processing (ADP.O), were down about 6 percent at $25.17 in morning trade on Nasdaq. It touched a low of $24.06 earlier in the session. (Reporting by Archana Shankar in Bangalore; Editing by Ratul Ray Chaudhuri)