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Workday's Guidance May Be Conservative

WDAY - Workday's Guidance May Be Conservative

Workday Inc WDAY reported strong quarterly results, with billings ahead of expectations. Given these results, the company’s guidance appears “conservative on most metrics,” BMO Capital Markets’ Keith Bachman said in a report. He maintained a Market Perform rating on Workday, while raising the price target from $90 to $93.

Workday reported its quarterly billings at $431 million, beating the consensus estimate of $420 million. Management raised the higher-end of its billings guidance range for FY17 by merely $5 million, which is less than the billings beat of $11 million in the quarter, analyst Bachman noted.

Key Takeaways

“Commentary around financial products sounds promising, consistent with our views,” Bachman wrote. He commented that although Workday had reported a beat on operating profit, this was less significant than the revenue and billings growth recorded by the company for the quarter.

The analyst raised the revenue and EPS estimates for FY18 from $2,058 million to $2,068 million and from $0.40 to $0.45, respectively. The FCF per share estimate for FY18 has been revised upwards from $1.01 to $1.13.

The rating has been maintained because the stock does not appear “compelling at current valuations,” Bachman added.

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DateFirmActionFromTo
Aug 2016CitigroupMaintainsNeutral
Aug 2016Drexel HamiltonMaintainsBuy
Aug 2016Canaccord GenuityMaintainsBuy

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