Analyst: Buy This Tech Stock Before Earnings

The brokerage firm is targeting major upside for the software stock

Mizuho Securities initiated coverage on Workday Inc (NASDAQ:WDAY) with a "buy" rating and a $225 price target -- a 17.8% premium to last night's close at $190.92. The brokerage firm said the company's cloud platform and prism analytics products could be "game-changers," potentially becoming $1 billion businesses.

Today's bull note comes ahead of the software company's second-quarter earnings report, due out next Thursday, Aug. 29, and echoes the broader trend seen among the brokerage bunch. Prior to today, 15 of 27 analyst maintained a "buy" or better rating on WDAY stock. Plus, the average 12-month price target of $212.91 is a healthy 11.5% premium to current trading levels.

The optimism is seen in the options pits, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Workday's 10-day call/put volume ratio of 1.56 ranks in the 71st annual percentile, meaning calls have been bought to open over puts at an accelerated clip.

Drilling down, the weekly 8/30 200-strike call has seen the largest increase in open interest over this two-week time frame, and data from the major options exchanges confirms mostly buy-to-open activity here. By doing so, call buyers are betting on Workday stock to break out above $200 by expiration at the close next Friday, Aug. 30.

Looking at the charts, WDAY shares charged higher off their late-November lows near $118, topping out at a record high of $226.83 on July 12. The tech stock pulled back from this milestone, but found a firm foothold atop its 200-day moving average. Today, the equity is up 0.4% at $191.61.