Workday (WDAY) Price Target Lowered to $90 at Goldman Sachs on Lower Billings Estimates

Goldman Sachs maintained a Neutral rating on Workday (NYSE: WDAY) and lowered its price target to $90.00 (from $95.00). The change follows Q3 results and reflects lower billings estimates.

Analyst Heather Bellini said, "Billings once again outperformed, coming in at $242mn or growth of 57% and compared to 56% growth posted in F2Q15 (consensus $233mn or +51%), with upside driven by strength on both the subscription and professional services revenue lines. That having been said, deferred revenue came in just short of consensus for the first time since the company went public."

"For FY16, Workday said that while early in its planning process, they are currently forecasting revenue growth of no more than 40% yoy versus the current consensus forecast of 48%. On the F3Q14 EPS call, management had guided for FY15 revenue growth to initially come in at 50% with its current forecast is now 66-67%. We see no change in the company’s conservative guidance posture and management noted that they would provide more detailed FY16 guidance when they report F4Q15 results," continued the analyst.

"While we view Workday as transformational company, we remain on the sidelines given current valuation. We are updating our 12-month price target to $90 (previous $95) based on lower billings estimates. Our price target is based on an equal weighting of our DCF, EV/billings and EV/CFO analysis," she added.

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 $92.49 yesterday.

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