Needham & Company Remains Sidelined Ahead of Workday's (WDAY) 3Q Report
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Needham & Company reiterated a Hold rating on Workday (NYSE: WDAY) ahead of the company's 3Q earnings report. Needham expects billings to be in line to slightly ahead of guidance and current $445.7mm billings estimate, up 31% Y/Y. The conference call, on December 1st, is scheduled to start at 5pm.
Analyst Scott Berg commented, "We preview Workday's upcoming 3Q financial results below but remain cautious and on the sidelines as we believe billings upside is likely minimal versus a high relative valuation of 7.3x EV/FY18 revenues. Overall, we believe our checks suggest WDAY's 3Q was very similar to 1H17, which we believe should yield an in-line to nominal billings beat. Our HCM checks highlight mid-market demand as the strongest segment, though the enterprise segment seemed to improve nominally. Our Financials conversations suggest deal flow remains up significantly Y/Y, but trails mgmt.'s pipeline commentary. We heard much about efforts to reduce mid-market implementation costs as WDAY continues to move more aggressively downstream, which we believe did not have much impact on 3Q but could lead to higher win rates longer term."
Shares of Workday closed at $83.64 yesterday.
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