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Workday May Hit $5 Billion In 5 Years As Financial Software Rises

At the rate Workday ( WDAY ) is growing its core human capital management (HCM) software, combined with its new financial management products, analysts Ross MacMillan and Matthew Hedberg can see Workday’s path to $5 billion in yearly sales by 2021. The company just hit it first billion-dollar year, closing its fiscal year ended Jan. 31 with sales of $1.16 billion. The pair of RBC Capital Markets analysts on Sunday raised their price target on Workday stock to 92 from 72 and affirmed their outperform rating. Workday stock rose a fraction Monday to a 2016 high, making its seventh consecutive up-day, closing at 78.92. Last week, Workday stock broke out of a cup-with-handle at a 75.60 buy point. Workday wasn’t alone Monday. Rival ServiceNow ( NOW ) rose 3.6% to 64.28 on a bullish report from William Blair on its long-term fundamentals. Bigger enterprise software rivals Salesforce ( CRM ), Oracle ( ORCL ) and SAP ( SAP ) all slipped a fraction. RBC’s MacMillan and Hedberg drew confidence by comparing Workday to PeopleSoft in 2001, four years before its HCM and financial management (FM) software businesses were acquired by Oracle for $10.4 billion. PeopleSoft co-founder David Duffield, who fought the Oracle takeover, went on to co-found Workday. “A look back at PeopleSoft is striking,” they said. “Workday today has (less than) 25% of PeopleSoft’s customer count in 2001, yet Workday has (more than) 50% of PeopleSoft’s revenue at that time. This is particularly interesting, given Workday has yet to generate any meaningful financial management revenue today and which (according to management) was (more than) 50% of PeopleSoft’s revenue at the time of acquisition by Oracle.” In other words, the RBC analysts say, Workday has plenty of room to grow. “Success in financials would support a path to $5 billion,” they wrote. “While financials (are) not the focus in this note, we think the path to $5 billion revenue remains underpinned (split less than 50% HCM, more than 50% FM) which we think can be realized in the next 5-plus years.” For its fiscal 2016 ended Jan. 31, Workday revenue rose 48% to $1.16 billion. It lost 1 cent per share minus items, a huge improvement from a 33-cent loss in fiscal 2015. Analysts polled by Thomson Reuters expect a Q1 per-share loss minus items of 2 cents, on revenue up 35% to $339 million. They expect adjusted profit to break into the black in Q3.

After Hours: Allergan, Tesla Motors, Walt Disney Shares Fall

Allergan ( AGN ) tumbled on new tax inversion rules, Tesla Motors ( TSLA ) skidded on weak Q1 deliveries and Walt Disney ( DIS ) retreated as a key executive exited, raising doubts about who might be the eventual successor to CEO Bob Iger. Allergan stock fell 21% after the Treasury Department issued new rules to curb so-called tax inversions. That includes steps to curb earnings stripping, a method used to reduce taxes after an inversion. Pfizer ( PFE ) and Ireland-based plan to merge, with Pfizer’s takeover structured to reduce U.S. tax liability. Pfizer stock edged higher late after closing up 2.3%. Allergan had closed 3.5% higher. Tesla Motors said that it delivered 14,820 vehicles in Q1, up nearly 50% vs. a year earlier but below the company’s February forecast for 16,000. Tesla blamed “severe” parts shortages for the Model X crossover — and its own “hubris.” Tesla shares fell 4% late, erasing nearly all its 4% regular-session gain on huge preorders for the Model 3. The Model 3 is supposed to go into production by late 2017, with total vehicle production hitting 500,000 by 2020. Walt Disney said after the close that COO Thomas Staggs, who was seen as a possible successor to CEO Bob Iger, is leaving May 6. Staggs will serve as a special advisor to Iger. Disney stock fell 2% after closing down 0.4%. Meanwhile, Salesforce.com ( CRM ) agreed to buy artificial intelligence startup MetaMind for undisclosed terms, the latest big tech to step up AI takeovers and investments. Salesforce CEO Marc Benioff invested in MetMind back in December 2014. Salesforce stock was little changed late.

Why You Should Closely Watch Apple’s Stock Chart

Loading the player… Apple ( AAPL ) shares tried to make a pivotal move in the stock market today with the recapturing of a key technical level. Credit Suisse raised its price target on Apple from 140 to 150, saying that gross profit from Apple services — including Apple Pay, Apple Music and iCloud — has big growth potential. Meanwhile, Brean Capital cut its price target from 170 to 155. The analyst said that the Street’s iPhone unit shipment expectations for the March and June quarters may be too optimistic. Shares jumped as much as 1.9% in heavy volume Monday morning, breaking past resistance at the 110 price level and retaking the critical 200-day moving average in intraday trade. Apple hasn’t traded above the 200-day since five months ago, and even then it stayed above the line only briefly. Shares pared their gains to close up 1% at 111.12, pennies below their 200-day line at 111.32. If the stock can close above the 200-day line, it would be bullish. The stock has suffered severe technical damage over the last year, but it’s up more than 20% from its January low. Apple is now 16% below its all-time high of 134.54, reached at the end of last April. Among other widely held tech stocks, Microsoft ( MSFT ) is trading about 2% below its late December high and a consolidation base buy point of 56.95. Microsoft shares were down 0.5% in intraday trade. Facebook ( FB ) fell 3% in big volume on a cautious report from Deutsche Bank. Facebook is now trading about 4% below its February high and a buy point at 117.69. Google owner Alphabet ( GOOGL ) is trading 6% below a cup-base buy point of 810.45. Alphabet lost 0.6% Monday. And Netflix ( NFLX ) is hitting resistance at its 200-day line for a second session. The stock is 21% below its December peak. Netflix shares fell 1.3% Monday.