BTIG Previews Workday's Q2 Results, Comments On IBM Deal

Workday Inc (NYSE: WDAY) is scheduled to report its F2Q17 results on August 24. The company would likely report an in-line quarter and turn profitable by FY18, BTIG’s Joel P. Fishbein said in a report. He maintained a Buy rating on Workday, with a price target of $92.

Analyst Fishbein expects Workday to report 31 percent y/y growth in revenues and 35 percent y/y increase in billings, backed by the continued uptake of HCM and Financials solutions. He added that the company “continues to move upmarket, while investment in better onboarding tools should stave off competition in the core mid-market customer base.”

Since profitability is not expected until FY18, the focus is likely to be on the potential competitive implications of Oracle Corporation’s (NYSE: ORCL) [Rated: Buy, PT: $47] acquisition of NetSuite Inc (NYSE: N) [Rated: Neutral]. “We think these will be mitigated, though, by sustained solid execution,” Fishbein commented.

Deal With IBM

Workday has recently announced a 7-year infrastructure deal with International Business Machines Corp. (NYSE: IBM). The analyst expects Workday to continue to rely on Amazon.com, Inc’s (NASDAQ: AMZN) AWS in the near term. He added, however, that the “expanded capacity of IBM’s public cloud bodes well for Workday’s innovation cycle.”

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