Jefferies Upgrades Workday On Signs Of Pipelines Building

A proprietary survey indicates that the pipelines for back-office apps are starting to build again and Workday Inc (NASDAQ: WDAY) seems to have a long runway for growth, according to Jefferies.

The Workday Analyst: Brent Thill upgraded Workday from Hold to Buy, while raising the price target from $250 to $260.

The Workday Thesis: Of the 300+ CIOs and CTOs surveyed, 74% indicated that COVID-19 had accelerated their shift to the cloud, Thill said.

“92% of respondents are either likely or very likely to adopt Workday HCM. We believe this highlights Workday's product leadership within the HCM space,” he wrote in a note.

The analyst further expressed confidence in Workday’s ability to generate margin leverage, coupled with growth. “We believe WDAY has multiple levers to drive growth over the LT,” he said, citing expectations of the company’s total addressable market growing to $99 billion by 2024.

Workday is still in the early stages of growth for products like Procurement, Planning, and Prism Analytics, and has significant opportunity to expand its business model across geographies, Thill noted.

WDAY Price Action: Shares of Workday rose 4.7% to $227.21 on Wednesday.