Credit Suisse Downgrades Workiva (WK) to Neutral
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Credit Suisse downgraded Workiva (NYSE: WK) from Outperform to Neutral with a price target of $16.00 (from $18.00).
Analyst Michael Nemeroff commented, "ful EPS beat but mgmt. was forced to lower their Q4 revenue guidance by ~7% due to elongated sales cycles as WK pursues larger, enterprise-wide deals, which is expected to persist into next year; we reduce our 2017 revenue growth expectations to +16% yr/yr (from +22% previously). As such, we lower our rating to Neutral due to the sizeable deceleration in revenue growth and increased execution risk given WK's evolving business model and new deal cadence. We continue to have a positive view on WK's disruptive suite of enterprise productivity/collaboration products and believe there is a significant TAM opportunity for the company's SEC/non-SEC usecases. That said, given the expected meaningful deceleration in revenue growth, combined with persistent (albeit shrinking) operating losses, we believe that it will take a few qtrs. for the stock sentiment to improve before investors are willing to assign a higher multiple to shares. Neutral. "
The firm lowered 2016/2017 revenue to $178M/$206M from $181M/$221M, but increase EPS to ($0.84)/($0.76) from ($0.98)/($0.96),
Shares of Workiva closed at $16.50 yesterday.
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