Workday Shares Initiated Outperform At Bernstein

In a report published Tuesday, Bernstein analyst Mark L. Moerdler initiated coverage of < b>Workday Inc

with an outperform rating and a price target of $91. Workday's share price has declined after the company reported in-line results but issued a weak guidance. The current stock valuation does not reflect the company's growth potential. "We believe this weakness creates an opportune entry point on the stock since we believe that the company has significant opportunities to continue to grow at a very high rate given their best in class SaaS solutions, combined with detailed market knowledge and experience," analyst Mark L. Moerdler mentioned. The company is expected to post strong revenue growth in the near future. In the report Bernstein noted, "We project a 43% growth CAGR through 2017 with a longer-term stable growth of 30%+, propelled by increased market penetration in HCM and Financials, share gains enabled by Workday's differentiated and premium set of SaaS-based solutions." Workday's strength lies in its strong and experienced management team and their consistent innovations and efficient leadership. "We forecast 8 percentage points of gross margin expansion for Workday through FY19 and believe long-term gross margins could reach 74%, propelled by Workday's ability to scale better from building out their own technology and high R&D efficiency allowing Workday to effectively turn expenses into new product offerings," Moerdler added.