Needham & Company Reiterates Buy on Workday (WDAY) Following 1Q Earnings Report

Needham & Company maintained a Buy rating and $85.00 price target on Workday (NYSE: WDAY) following the company's 1Q earnings report. WDAY reported revenues of $345.4mm ahead of Needham's $338.3mm estimate. EPS of $0.06 also came in ahead of ($0.01) estimates. Also, for the first time, the company publicly announced plans on reaching profitability in FY18.

Analyst Scott Berg commented, "WDAY reported a good but not great quarter as the company's billings beat was the weakest since its IPO in terms of an absolute dollars beat ($7mm on the top end) and a percentage beat (2% on the top end). We believe that WDAY's other metrics support this view as HCM and Financials deal metrics were likely just in line with seasonally lower expectations but were absent any large mega-deals in the quarter. However, we believe WDAY's announced profitability intentions become the new narrative and buoy concerns about the nominally weaker 1Q metrics in the short term. We believe that 1Q results support our thesis on overall business trends are OK but lack some of the upside demand trends and potential seen in 2012-2014 unless Financials significantly outperforms, which likely keeps WDAY shares rangebound over the near term."

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 $75.84 yesterday.

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