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Workday Earnings Reviewed By JMP Securities

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In a report published Wednesday, JMP Securities analysts maintained a Market Outperform rating on Workday Inc (NYSE: WDAY), with a price target of $116, after the company reported better-than-expected F1Q16 results, but announced tepid guidance for F2Q16.

Although Workday reported its F1Q16 results ahead of expectations, its internal execution during the quarter was disappointing. The analysts commented that it was "perhaps the worst in many quarters."

Workday's stock declined by about 7 percent in the aftermarket. The analysts believe that the factors triggering the disappointing internal execution - "in order of magnitude" - were:

  • Shift in deals into F4Q15 from F1Q16
  • Lack of "depth in its pipeline" for Financial Management, especially with enterprise customers
  • General need to improve sales execution
  • The company's hiring execution falling short by 100 employees in sales and marketing
  • A lack of execution in the APAC region

The analysts expressed their optimism, however, regarding the company's performance beyond F1Q16, in view of:

  • Workday continues to win marquee HCM names, including Hitachi, Dell Inc. (NASDAQ: DELL) and The Coca-Cola Co (NYSE: KO)
  • Workday indicated that its Financial Management offering has several Fortune 250 accounts in the pipeline

The non-GAAP EPS estimate for FY16 has been raised from ($0.22) to ($0.18), versus the consensus estimate of ($0.21).

Posted-In: JMP SecuritiesAnalyst Color Reiteration Analyst Ratings


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