Pacific Crest Downgrades Workday (WDAY) to Sector Weight

Pacific Crest downgraded Workday (NYSE: WDAY) from Overweight to Sector Weight and removed its price target. Analyst Brendan Barnicle moved to the sidelines following recent gains in the share price, with the stock up 57% since February.

"WDAY has increased 57% from its Feb. 9 low of $48.90, and it now has resumed its position as one of the most expensive names in SaaS. While still an industry leader, it is likely that Workday's competitive position could be more uncertain over the remainder of the year, and billings could still face a headwind from changes in billing terms. As a result, we are downgrading to Sector Weight," said Barnicle.

"Over the past year, Oracle and SAP have become much more aggressive competing with Workday. It has also taken Workday longer than expected to finalize its Financials product. While we find the Financials product compelling, we are increasingly concerned that competition will create market uncertainty this year, which is likely to limit Workday's upside," added the analyst. "We do not expect that Workday will miss expectations, but the change in billing terms should remain a headwind in FQ1 (April). While management expects the headwind to dissipate, it could continue to be a headwind if the company is successful signing more Financials deals."

For an analyst ratings summary and ratings history on Workday click here. For more ratings news on Workday click here.

Shares of Workday closed at $76.95 yesterday.

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