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Workday, Inc. (WDAY) saw improved performance recently and overall outpaced the S&P 500, rising by approximately 78.5% as of November 2021, compared to the S&P’s gain of about 52.7% over the past 2-years. However, hedge funds were selling the stock in the second quarter, and this cloud-based company fell on the WhaleWisdom Heatmap to a ranking of forty-four from ten.

Workday provides enterprise cloud applications for finance and human resources to help businesses manage critical functions and optimize their financial and human capital resources. Workday’s applications assist companies, educational institutions, and government agencies with everything from accounting functions to procurement, time tracking, and talent management. Throughout the coronavirus pandemic, Workday has been able to leverage the accessibility and flexibility of its cloud-based applications to promote its value in helping businesses navigate dynamic workforces and changing needs.

Mixed Results from Hedge Funds and Institutions

Workday saw increased interest from institutions while hedge funds were selling in the second quarter. The aggregate 13F shares held by hedge funds decreased to about 61.5 million from 61.6 million, a decrease of approximately 0.2%. Of the hedge funds, 33 created new positions, 86 added to an existing holding, 23 exited, and 62 reduced their stakes. Institutions were buying and increased their aggregate holdings by about 1.3% to approximately 170.7 million from 168.5 million.


Estimates Vary

Analysts expect revenue to rise over the next two years, with increases in growth predicted to bring revenue to $5.1 billion by January 2022 and $6.1 billion by January 2023. Year-over-year earnings estimates are not as consistent as revenue, with $3.54 per share predicted by 2023, down from an estimated $3.66 per share in 2022. While earnings are expected to dip in 2023, the 13F metrics between 2019 and 2021 suggest that Workday remains on a gradual, upward trend among investors despite the fundamental outlook.


Analysts Share Favorable Ratings

Analyst Scott Berg from Needham & Co. raised his firm’s price target on Workday to $310 from $290, maintaining a Buy rating on the stock. Berg believes that Workday can maintain a healthy level of subscription revenue growth of at least 20%. Daiwa Capital Markets initiated coverage of Workday with a $320 price target and a Buy rating. Analyst Robert Simmons of DA Davidson initiated coverage with a Buy rating and set a $300 price target on shares. Simmons expressed confidence in the company’s ability to sustain subscriber growth, citing Workday’s dominance in Cloud HCM and increased international investments. Deutsche Bank analyst Brad Zelnick also gave Workday a Buy rating and set a $360 price target, looking past the stock’s underperformance with optimism for the future.

Optimism Beyond 2021

Workday saw growth over the past year, following an upward trend through the pandemic. While the stock may be underperforming, analysts share their optimism through Buy ratings. With continued demand for applications that enable businesses to optimize their financial and human capital resources, Workday’s business model and stock hold promise beyond 2021 for patient investors.

This entry was posted on Monday, November 8th, 2021 at 8:14 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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