Goldman Sachs Comments on Workday's (WDAY) Q1; Analyst Raises Price Target to $90

Goldman Sachs maintained an Neutral rating on Workday (NYSE: WDAY) and raised its price target to $90 (from $79). Comments follow Q1 results.

Analyst Heather Bellini said, "WDAY guided to F2Q15 total revenue of $173.0-178.0mn (+61-65% yoy) vs. consensus of $171mn (+59% yoy), which assumes Subscription of $137-140mn (+69-73% yoy). FY15 sales were forecasted to be between $730- 750mn (+56-60% yoy) vs. prior guidance of $710-740mn (+51-58% yoy) and the Street at $735mn (+57%). Lastly, FY15 billings were guided to $890-910mn, or 49-52% yoy growth, versus our prior forecast of $876mn (+47%). We are now modeling FY15 billings of $906mn (+52% yoy)."

"We maintain our Neutral rating with valuation concerns, though we view WDAY as a dominant force in SaaS as it continues to help redefine the HCM and financials enterprise application landscape. At ~$89 aftermarket, WDAY is trading at 16x and 12x our FY15 and FY16 billings forecasts of $906mn and $1,310mn (prior $876mn and $1,274mn). If we assume FY15 and FY16 billings outperform by the same percentage as they did in FY14 (when our initial billings forecast was 39% only to end the year at 61%) the stock is still trading at 8x on EV to FY16 “upside” scenario. We are raising our 12- month price target from $79 to $90 as we increase our billings estimate. Our price target is based on a DCF, EV/billings and EV/CFO analysis," she added.

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 $82.13 yesterday.

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