Workday Earnings Preview: Can The Company Beat Estimates Again?

Workday Inc WDAY is scheduled to report its first quarter (fiscal 2016) financial results next Tuesday, after the market closes, and the company guided revenue of $243.5 million.

According to Estimize, both experts and the crowd are slightly more confident.

The Street anticipates a net loss of ($0.08) per share on revenue of $244.71 million, while the crowd projects a net loss of ($0.07) per share on revenue of $245.71.

A few things should be noted from the chart above, which features a history of Workday’s earnings versus estimates.

Estimates for the current quarter imply an improvement from the net loss of ($0.13) on revenue of $159.7 million reported in the first quarter of last year. Secondly, the company has tended to surpass estimates over the past few years.

The table above includes earnings, revenues and estimates for the past couple of years.

Some Recent Expert Commentary

In a recent report, analysts at Brean Capital reiterated a Hold rating on Workday. According to an article published on Benzinga, “Although the analysts expect the company to report a marginal upside to its 1Q16 results, it is unlikely to be the usual beat and raise that Workday typically posts.”

The analysts expect upside of about 4-5 percent in reported billings and revenues. They also anticipate a surge in guidance for the full fiscal 2016. "However, we believe a beat and raise of a larger magnitude is priced in at the current valuation,” they add.

The firm explains it is “incrementally concerned about a potential bubble during the next several quarters where HCM may slow before Financials pick up.”

For their part, analysts at Needham initiated coverage of the stock with a Buy rating and a price target of $107. The analysts note that “Workday is poised for robust growth in view of its large market, well positioned product base and a subscription model with good revenue visibility,” and think this will drive revenue growth.

JMP Securities also rated Workday recently. The firm maintained a Market Outperform rating and a $116 price target.