UBS Reiterates Buy on Workday (WDAY) Following Mixed 2Q Results
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UBS reiterated a Buy rating on Workday (NYSE: WDAY), and raised the price target to $94.00 (from $86.00), following the company's 2Q. WDAY reported revenues of $378M, ahead of the Street's $373M estimate. EPS came in at -$0.04, missing -$0.02 estimates.
Analyst Brent Thill commented, "FQ2 metrics, deal trends, and mgmt. tone point to a very strong 2H while guidance looks conservative enough for cont'd beat & raise. Core HR was healthy: IBM and Dell expansions + new Samsung win. Fin'l Mgmt deal momentum is accelerating: 1/3 of Q2 deals included FM; we're more confident that 2H will see large enterprise wins; and ORCL/N integration may slow N in mid-market. Planning, which is not yet GA, has already signed >50 clients and is driving platform (joint HCM + FM) deals. Overall billings & revs should benefit in 2H as not all Planning deals have been invoiced yet and rev rec does not start until GA in late Sept.; in addition, Learning and Student pdts will also launch in Sept. Implied 2H guide looks conservative as FY17 raise of $7.5M/$3M for billings/revs at mid-pt is less than FQ2 beat of $11M/$6M, and pipeline looks plump. We continue to view WDAY as a core holding among Cloud/SaaS platforms."
Shares of Workday closed at $79.65 yesterday.
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