Goldman Sachs Raises Workday Price Target, Focused On 2017 Growth

Workday Inc WDAY reported its F4Q16 results, with the revenue and EPS ahead of the consensus expectations.

Goldman Sachs’ Heather Bellini maintained a Neutral rating on the company, while raising the price target from $71 to $80.

Beat Quarter

Workday reported a 38 percent year on year increase in revenue, driven primarily by the company’s professional services segment.

Non-GAAP operating margins also beat the consensus, growing 3 percent, as compared to the expectations of a one percent decline, driven largely by better than anticipated opex.

The non-GAAP EPS came in at $0.05, as compared to the consensus forecast of ($0.02), while reported billings were ahead of the consensus and the guidance.

What’s Happening In F1Q17

“The magnitude of billings beats decelerated this quarter, with reported billings beating consensus by 2 percent in F1Q17 versus average quarterly billings beats of 6 percent through FY16 and 10 percent through FY15,” the analyst mentioned.

Management noted that F1Q was usually not a “big deal” quarter, while stating that the Financials pipeline had strengthened over the past 90 days.

Management also indicated that “Workday is beginning to see international traction (calling out UK, Netherlands, France, and Finland).”

Management also pointed out that the company was still focused on prioritizing growth, while raising the FY17 billings guidance.