Wedbush Cuts Price Target on Workday (WDAY) to $99 Following 2Q16
Wedbush maintained an Outperform rating on Workday (NYSE: WDAY), and cut the price target to $99.00 (from $108.00), following the company's 2Q16 earnings results. Subscription revenue of $224M was $1M higher than Wedbush's above-consensus estimate. Management raised full-year revenue guidance $13M at the top end to $1,158M.
Analyst Steve Koenig commented, "WDAY posted the requisite 2Q beat and raised FY16 revenue guidance significantly. Subscription revenue of $224M (+56% Y/Y) was $1M higher than our above-consensus estimate, and derived billings of $312M (+51% Y/Y) were $11M above our estimate. Also encouraging was a full-year revenue guidance raise of $13M at the top end (to $1,158M, +47% Y/Y)."
Koenig also added, "We believe win rates and sales execution improved relative to 1Q. The company refocused its sales force on basics, such as highlighting WDAY’s customer references versus competitors’ references. Also, we believe the company continues to make progress in financial applications, although financials deployment activity still appears mostly concentrated in medium-sized enterprises. We believe the company’s financials pipeline is growing well and includes significant opportunities at large enterprises, and we suspect we will be hearing more about Fortune 500 wins for financials within the next several quarters."
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Shares of Workday closed at $72.40 yesterday.