Rosenblatt Starts Workday (WDAY) at Sell
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Rosenblatt analyst Yun Kim initiates coverage on Workday (NASDAQ: WDAY) with a Sell rating and a price target of $110.00.
The analyst comments "While we believe WDAY has demonstrated strong execution over the years to become one of the premier SaaS vendors in the industry, we are cautious on its medium-term growth trajectory that is dependent on the successful execution of multiple growth vectors while sustaining its core HCM (human capital management) business, which remains 80% of its subscription business. With our industry checks indicating that its large-scale HCM deployment is becoming a lower priority among large organizations, we believe the company's overall growth could lag the industry when the IT spending resumes. Our FY21 revenue and billings growth estimates, which are meaningfully below the Street, reflect our view of the current IT spending environment this year. Refer to our industry note. Shares traded at about 8x Street's CY20 revenue estimate on 19% growth (using 5/1 close), which is towards the lower end of its large-cap peers. However, we are wary of additional multiple compression if its medium-term growth rate slows to well below 20%."
Shares of Workday closed at $146.66 yesterday.
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