Market Overview

Needham Upgrades Workday Ahead of Q4 Report

Needham Upgrades Workday Ahead of Q4 Report

Improved sales for Workday Inc (NASDAQ: WDAY)'s financials platform could drive upside in the fourth quarter, according to Needham. 

The company is scheduled to release Q4 results after the close Feb. 27.

The Analyst

Needham analyst Scott Berg upgraded shares of Workday from Hold to Buy and set a $130 price target. 

The Thesis

Needham's checks indicated strong Q4 human capital management sales in large enterprise, Berg said in a Monday note. (See the analyst's track record here.)

Payroll commentary was mixed, the analyst said. 

"Although we got the stock wrong over the last 12 months as it moved higher on the strength of HCM sales, we think that any valuation above $100 ($20-billion market cap) is dependent upon sustained growth in the company's financials platform," Berg said.

The analyst expressed surprise at the traction gained by Workday's financial solutions.

"While we have no knowledge of any impending transactions, we believe FY19 and FY20 could be the start of Workday actively using M&A to augment its applications growth." 

Workday's education and government segments are performing well, Berg said. 

Workday's operating model is gaining leverage, even excluding any nominal benefit from the adoption of the ASC 606 accounting rule and the short-term commissions deferral benefit, according to Needham. 

Bookings upside plus visibility into 20-percent FCF margins in fiscal 2019 will keep the share price moving higher, Berg said. 

The Price Action

Workday shares are up over 34 percent over the past year.

At the time of publication, the stock was adding 3.49 percent to $116.90. 

Related Links:

Mizuho: After Industry Consolidation, Cloudera Emerges As A Buy

Workday A 'Long-Term Winner,' Morgan Stanley Upgrades

Photo courtesy of Workday. 

Latest Ratings for WDAY

Jan 2021Goldman SachsInitiates Coverage OnBuy
Jan 2021KeyBancMaintainsOverweight
Dec 2020B of A SecuritiesReinstatesBuy

View More Analyst Ratings for WDAY
View the Latest Analyst Ratings


Related Articles (WDAY)

View Comments and Join the Discussion!

Posted-In: Needham Scott BergAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at