Piper Sandler Upgrades Workday 'Ahead Of Promising 2021 Recovery'

Workday Inc’s WDAY subscription growth is likely to bottom in the second half of 2020 and reaccelerate in 2021, according to Piper Sandler.

The Workday Analyst: Brent Bracelin upgraded Workday from Neutral to Overweight and raised the price target from $248 to $275.

The Workday Takeaways: Workday has several catalysts to trigger the company’s subscription growth, Bracelin said in a Tuesday upgrade note.

“Upside levers include remote work tailwinds within the core HCM segment and a handful of potential FINS catalysts as it crosses over $1B+ revenue run-rate next year coupled with back-office automation that could open up an entirely new B2B payment revenue opportunity similar to Coupa Pay,” the analyst said.

He recommends buying the stock “ahead of a promising 2021 recovery,” while adding that Workday’s performance in 2022 could be even stronger if Gartner's forecasted spike in cloud ERP contracts materializes.

Gartner projected the spend to reach “$33B by 2024 on accelerating growth starting in 2022 from $18B in 2020,” Bracelin said.

WDAY Price Action: Shares of Workday were down 0.2% at $227.18.

Photo courtesy of Workday.