Wedbush Reiterates Underperform on Workday (WDAY) Following Solid 2Q
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Wedbush maintained an Underperform rating on Workday (NYSE: WDAY), and raised the price target to $69.00 (from $63.00), following the company's 2Q earnings report. WDAY reported a $5M revenue beat and strong billings.
Analyst Steve Koenig commented, "WDAY saw strong 2Q billings and a solid revenue beat stemming largely from professional services outperformance, but guidance was weak. Based on our read of WDAY’s numbers, new contracting activity in 2Q appeared to be lackluster. We were surprised by sharply positive after-market price action (shares were up over 12%), but we think it was likely driven by investor positioning as opposed to improving fundamentals. In the near-term, we’re skeptical that any post-earnings bounce will have legs in the days and weeks ahead, and we would use the opportunity to take profits in WDAY long positions. Given the strong run-up in WDAY shares since late June, we admit that our underperform thesis deserves careful scrutiny; what could make us wrong would be 2H deal acceleration, e.g. due to improving win rates over Oracle (ORCL, NEUTRAL) resulting from customer confusion from ORCL’s acquisition of NetSuite."
Shares of Workday closed at $79.65 yesterday.
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