Workday: Best Cloud Pure Play?

• Shares of Workday Inc WDAY have been volatile in the last one year and are down 15 percent since November 18, 2014.
• Drexel Hamilton’s Brian J. White maintained a Buy rating on the company, with a price target of $90.
• The company is expected to report robust 3QFY16 results and raise its revenue guidance for the full year, White mentioned.

Workday is one of the best pure-play cloud stocks in the market, despite the decline in its share value in 2015, analyst Brian White stated. He said that while Workday's shares have declined 6-7 percent after earnings reports over the past five quarters, a strong 3Q:FY16 report could lend healthy upside over the next year.

The company is expected to report robust 3QFY16 results, with revenues ahead of the estimates and in-line loss per share. White expects Workday to post 7 percent sequential growth in revenues with both Subscription Services revenues and Professional Services sales rising on a y/y basis.

Workday is leading the charge in the HCM SaaS market along with Oracle Corporation ORCL, the Drexel Hamilton report stated, while adding that the company is also gaining traction in Financial Management.

The company’s efforts to expand the breadth and depth of its portfolio position it well going into CY16, White believes. Workday is expected to post 4QFY16 revenues of $320.8 million and a loss per share of $0.03. The company is also expected to raise its FY16 revenue outlook after posting robust 3Q results.