Analyst Sees Workday's First SaaS Horizontal Platform 'Executing Well'

In a report published Wednesday, analysts at Needham initiated coverage of

with a Buy rating and a price target of $107. Workday is poised for robust growth in view of its large market, well positioned product base and a subscription model with good revenue visibility. "We believe the presence of all these factors currently drives a high revenue growth rate," the analysts mentioned. The company's SaaS model offers better ability to innovate and thus stay ahead of the legacy perpetual license vendors. Workday's focus on large customers is a positive feature. "Although we believe the company's current valuation assumes almost flawless near-term sales execution to further expand its valuation multiples, we believe its execution within a HCM market exhibiting high demand creates a positive risk/reward scenario for investors in the near term even though sales of the company's Financials platform remain limited," the analysts added. Outlining the factors that may restrict the company's future performance, the report mentioned that the company's financials remain mostly untested. Also the struggle between IT departments and HR over core HRMS and ERP systems may impact the SaaS versus on-premise decision.