ReadyTech Holdings' (ASX:RDY) research and development (R&D) capitalisation has peaked, according to analysts at Jefferies.

They predict it will moderate back to historical averages in the future.

The brokerage has increased the price target for RDY to A$4.30 per share from A$3.80 per share, while maintaining the ‘buy’ rating.

From the FY23 results, the company has projected a decline in labour capitalisation from approximately 16% in FY23 to a steady drop to 12%-13% by FY26.

Jefferies forecasts this decrease in labour capitalisation to result in a reduction of R&D capitalisation from 58% in FY23 to 40% in FY26.

Six out of six analysts rate the stock as ‘buy’ or higher, as per LSEG data.

So far this year, RDY stock has risen 8.8% as recorded at the last close.

ReadyTech Holdings is a company specializing in everything from careers, to workforce, to the role of technology in shaping the world of work.