Canaccord Genuity Reiterate Buy Following Workday (WDAY) Q1

Canaccord Genuity maintains a Buy rating on Workday (NYSE: WDAY), and cut the price target to $100.00 (from $110.00), following quarterly results. Analyst Richard Davis said that results showed upsides across the board. revenues of $251.0M, came in $6M ahead of estimates. Non-GAAP EPS beat estimates by $0.06.

Davis commented, saying, "We believe WDAY faces a decade of growth that should propel the firm past $10 billion in revenues within nine years and deliver roughly 20% IRR to that point. This describes a “secular buy” in which it makes sense to trade around a core position. Heading into its Q1 print, WDAY was trading in the upper third of a gradually decaying EV/revenue multiple band that we peg at roughly 8-11x C2016E – thus, we weren’t terribly surprised to see the stock trade off on otherwise solid results that were skewed by a challenging billings compare. Therefore, we would use any weakness to accumulate a roughly “normal” position in the stock."

Davis also added, "For the full year, WDAY inched up revenues and billings each by $7.5M at the midpoint, while also tightening the ranges slightly. Non-GAAP operating margins for the full year are expected to be in the (2)-(4)% range, which at the midpoint suggests an increase of roughly 370 bps y-o-y. Our F2016 billings estimate
remains at the high end of the guidance range and we continue to believe there is
upside to our 35% growth."

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 $92.49 yesterday.

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