BTIG Says Workday 'Working It,' Raises Price Target

Workday Inc WDAY reported healthy quarterly results, with both billings and revenues beating Street expectations. Large customer wins and a healthy pipeline support the assumption of the company being able to sustain medium term growth of more than 30 percent, BTIG’s Joel P. Fishbein said in a report.

Analyst Fishbein maintained a Buy rating on Workday, while raising the price target from $92 to $97.

Strong Core Drivers

Workday reported a quarterly beat once again and raised its full-year guidance. The figures highlighted the strength of the core HCM offering, with a particularly impressive performance by international. They also reflected the mid-market Financials opportunity.

Backlog in the quarter rose more than 50 percent y/y, while win rates for Financials have reached the levels of the core HCM product, Fishbein noted. He added, “This bodes well for the strong 2H pipeline, which management stated contains several large- and mid-enterprise deals.” In case win rates remained consistent, the implied billings guidance of 29 percent y/y growth in the back half could prove to be conservative.

“We see a $5 billion revenue business within the next ten years, especially as the platform story comes to fruition (a third of the deals in the quarter included both HCM and Financials),” the analyst wrote.

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