Needham & Company Downgrades Workday (WDAY) to Hold Amid Cautious Industry Checks
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Needham & Company downgraded Workday (NYSE: WDAY) from Buy to Hold, saying checks indicate 2Q billings upside will again be limited and Financials sales, while likely up Y/Y, remain challenging.
Analyst Scott Berg commented, "We downgrade WDAY to Hold from Buy as our recent industry checks indicate 2Q billings upside will again be limited and Financials sales, while likely up Y/Y, remain challenging. We like WDAY's long-term strategy and believe its significant push into financials is the right strategic move, but our checks continue to suggest the high end of the HRMS market remains slow and competitive, along with Financials sales remaining difficult as customers don't seem ready for a Cloud solution, and functionality not quite complete yet. We believe the result will be 2Q billings in line with recent decelerating trends for outperformance, and with a valuation trading at 9.5x EV/FY17 revenues and 7.x FY18, we believe the stock to be fully valued. We could become more constructive if our view on Financials proves too conservative."
Shares of Workday closed at $82.08 yesterday.
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