• The shares of Workday (NASDAQ: WDAY) have received a $260 price target from BofA Securities. These are the details.

The shares of Workday (NASDAQ: WDAY) have received a $260 price target from BofA Securities. And BofA Securities analyst Brad Sills reiterated a “Buy” rating on the shares.

Sills adjusted the rating after speaking with nearly a dozen key SI partners post-quarter close and hearing that the first-quarter activity tracked from in line to slightly better overall. 

The key takeaways include:

1.) Healthy first deal activity with growth generally holding with solid first-quarter levels

2.) On the back of a tightening labor market, partners continue to see strength in HCM with SKUs like Learning, Recruiting, and Peakon seeing a strong attach

3.) Procure and Supply Chain modules gaining traction on the FINS side

4.) Adaptive Planning (in both FINS and HCM deals) attach rates remain a standout area of strength

5.) A few partners had noted a slowdown in their practices in the early days of the second quarter given macro concerns with this appearing to affect FINs projects/practices more than HCM, while also generally isolated to EMEA.

“Given commentary for solid Q1 activity, we expect Workday to report healthy Q1 current bookings (rev+change in cRPO/backlog) and cRPO (24 month RPO) upside. In our upside case, we assume 1) NRR of 102% (above recent est 101%), 2) gross retention of 95% (consistent with Q4), 3) net new customer signings of 120, up from est 100 in Q1FY22, 4) new customer bookings mix of 22%, consistent with Q4, and 5) change in cRPO for the year to be 6% of total bookings, consistent with seasonal Q1 mix,” wrote Sills in a research note.

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