Workday Inc WDAY will benefit from the replacement of aging business planning systems installed in a rush during the historic Y2K panic of 15 years ago, an analyst said Monday.
Brean's Sarah Hindlian launched coverage on Workday Monday with a Hold rating and $86 target.
"We expect Workday to be a clear winner," Hindlian said. "The questions are: when, by how much, and at what valuation?"
Workday, down 17 percent in the past 12 months, fell sharply after posting fourth-quarter results in February. Shares closed Monday at $83.87, up $1.31.
Given a typical 15- to 25-year life-cycle for enterprise resource planning software, Hindlian expects "replacements to pick up and Workday to have a seat at the table."
In the run-up to the year 2000, companies worldwide spent an estimated $300 to $400 billion or more to fix computer software that failed to distinguish between the years 1900 and 2000.
With the need to replace those now-creaking corporate software systems that manage personnel and finance, Hindlian said Workday's subscription model may offer a cost advantage versus legacy on-premise vendors.
But Workday is replacing tools that are complex and therefore expensive to update, and the products are a slow sell and take time to replace, Hindlian said.
A key to the company's potential growth rate is acceptance of its financial management tools, according to the analyst. The company is best-known for its personnel management software.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.