Workday (WDAY) Stock Price Target Lowered at Pacific Crest Securities

Workday's (WDAY) price target was lowered to $100 from $120 at Pacific Crest Securities on Friday.
By Amanda Albright ,

NEW YORK (TheStreet) -- Workday (WDAY) - Get Report stock closed down 1.41% to $83.11 on Friday, after PacificCrest Securities lowered its price target on the company to $100 from $120 earlier today. The firm maintained its "overweight" rating on the stock.

After the market close on Thursday, the Pleasonton, CA-based company, which is a financial management and human capital management software provider, reported that it broke even in its 2016 fiscal third quarter earnings results.  Revenue increased 42% year over year to $305.3 million.

Analysts were expecting the company to report a loss of 4 cents per share on revenue of $303.3 million. 

Additionally, Workday projected its fiscal 2017 revenue at 30% year over year growth, which is lower than the Street's estimates for 37% growth, the firm said.

Pacific Crest lowered its price target on the stock due to increased uncertainty about the payments terms.

Separately, TheStreet Ratings team rates WORKDAY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate WORKDAY INC (WDAY) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, WORKDAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • WDAY has underperformed the S&P 500 Index, declining 13.29% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income has decreased by 0.3% when compared to the same quarter one year ago, dropping from -$69.22 million to -$69.42 million.
  • WORKDAY INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WORKDAY INC reported poor results of -$1.35 versus -$1.00 in the prior year. This year, the market expects an improvement in earnings (-$0.08 versus -$1.35).
  • Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.92 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: WDAY

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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