Shares of Salesforce, San Francisco, at last check were up 1.4% to $163.72, while Workday, Pleasanton, Calif., was 2.1% higher at $151.62.
Analyst Yun Kim said in a note to clients that Salesforce "currently enjoys a de facto enterprise standard status in the enterprise business application market."
"This has led to an increasing number of large enterprise standardization deals, which has been a key driver behind its stellar 20%-plus annual revenue organic growth track record," said Kim, who set a share price target of $120.
"However, with our industry checks indicating large scale business application deployment is becoming a lower priority among large organizations, we expect large deal activity to slow even after the IT spending rebounds."
Kim also said that with the February departure of Co-Chief Executive Keith Block, he was wary that some key sales executives that are close to him may also depart.
"This possibility could impact its large deal execution since many of them were instrumental in building and scaling a sales organization that could close large strategic deals," he said.
Regarding Workday, Kim said that since the coronavirus pandemic "started to impact the current IT spending environment, we are seeing large-scale business application deployment plans and even some ongoing projects being downsized significantly or even canceled."
"Hence, we believe when the overall enterprise IT spending returns, spending on this type of large business standardization projects, including [human capital management], will lag other initiatives (such as cloud infrastructure management and cloud-based security deployments) that are likely to receive higher priority," the analyst said.
Kim added that while Workday "has grown its international business from 18% of new [annual contract value] bookings in fiscal 2015 to 27% last year, ... the growth in the international markets carry a higher execution risk and the growth may not be as scalable given the country-specific requirements that need to be incorporated and updated constantly into its HCM solution."
"We also remain wary of a highly competitive medium enterprise market segment, which has historically been price-sensitive and more payroll driven," he said.
Kim set a price target of $110 a share on Workday.