Brian White: Thinking Different At Workday Could Make Difference

In a report issued Thursday, Cantor Fitzgerald’s Brian White reiterated a Buy rating and a $125 price target on Workday Inc WDAY. White's team says, “Thinking Different from the Beginning Could Make All the Difference in the End...”

The report comes after the company’s Financial Analyst Day in San Francisco, to which the analysts attended. The focus was put on products and technologies. The analysts at Cantor Fitzgerald left with the conclusion that “Workday has a unique industry position given its fresh approach to ERP solutions with a sole focus on Software-as-a-Service (SaaS) and Workday represents one of the best next-gen cloud plays.”

The firm highlights three main points in the note.

1) Starting with a total focus on SaaS from Scratch “has Built a Strong Tech Foundation.” Their focus on the cloud since the beginning, has allowed them to leverage “important technologies such as a multi-tenant architecture, in-memory data management, an object-oriented technology framework, and a modern user interface that emulates the consumer Internet experience.” Management even discussed -in the Financial Analyst Day- plans to release an Apple Watch app within the next six months, “while also discussing investments in human voice recognition and plans to work more closely with Splunk.”

In Cantor’s view, “Workday's strong technology allows it to offer more cost effective and better performing solutions versus on-premise offerings.”

2) “The company also indicated that the first 10 years of Workday have been focused on the cloud but the next 10 years will be more focused on data and analytics. Workday believes the core technology underpinnings and multi-tenant architecture will prove a competitive advantage in the world of data.”

 3) The company has significant opportunity in HCM and Financial Management. However, the analysts believe its ambitions in the ERP world are even grander. According to the report, “management indicated that the company is learning about learning, budgeting, planning and forecasting. Given the size of the enterprise applications market with a shift into the cloud, combined with market's fragmentation, we [the analysts] believe Workday has a big, long-term, market opportunity that goes well beyond HCM and Financial Management.”