Oppenheimer Believes Workday (NYSE: WDAY) Won’t Stop Here

By Austin Angelo

In a report released today, Brian Schwartz from Oppenheimer reiterated a Buy rating on Workday (NYSE: WDAY), with a price target of $110. The company’s shares closed yesterday at $101.50, close to its 52-week high of $101.61.

Schwartz noted:

“Consistent with our preview, Workday’s business performed well in F1Q with increases to average deal size, good sales productivity, and strong commentary on the financials business. Additionally, management introduced new metrics that enhance the predictability and visibility of future subscription revenues, a positive development. On balance, the F1Q deferred revenues and billings growth metrics lagged revenue growth from the increasing compounding invoicing seasonality, though net new ACV grew the fastest for a F1Q in three years supporting a strong sales performance. Bottom Line: While current valuation is likely pricing a meaningful successful trajectory for Workday’s business this year, we see the operating margin growth potential as providing a good path to expand the investor-base given a dearth of strong recurring revenue growers with improving profitable operating margin names in large-cap software.”

According to TipRanks.com, Schwartz is a top 25 analyst with an average return of 22.5% and a 76.2% success rate. Schwartz covers the Technology sector, focusing on stocks such as Palo Alto Networks, Callidus Software, and Ultimate Software.

Currently, the analyst consensus on Workday is Moderate Buy and the average price target is $99.42, representing a -2.0% downside.

In a report issued on May 23, RBC Capital also reiterated a Buy rating on the stock with a $105 price target.

Based on Workday’s latest earnings report for the quarter ending April 30, the company posted quarterly revenue of $480 million and GAAP net loss of $64.04 million. In comparison, last year the company earned revenue of $345 million and had a GAAP net loss of $80.62 million.

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Workday, Inc. engages in the provision of enterprise cloud applications for finance and human resources. It delivers financial management, human capital management and analytics applications designed for the world’s largest companies, educational institutions, and government agencies. The company was founded by David A. Duffield and Aneel Bhusri in March 2005 and is headquartered in Pleasanton, CA.