Workday, Inc. (WDAY) has experienced soaring growth over the past year, outperforming the S&P 500 and rising by approximately 39.1% as of April 30, 2021, compared to the S&P’s gain of 29.2%. Hedge funds and institutions are actively buying. The stock moved up on the WhaleWisdom Heatmap to a ranking of 26 from 43.
Workday is a provider of on-demand enterprise cloud-based software. Workday specializes in human capital management (HCM), enterprise resource management (ERP), and financial management solutions. Consumer demand for the company’s applications has accelerated during the coronavirus pandemic. During the pandemic, many organizations felt a push to move critical functions such as procurement, payroll, and employee expense management to the cloud. Additionally, many workforces shifted to remote work, impacting talent management as employers placed more importance on the best fit for a position and less focus on talent location. Workday’s applications offer flexible solutions to address businesses’ changing needs.
Hedge Funds Are Buying
Workday’s performance has garnered the attention of hedge fund managers and institutions. Looking at activity by the top hedge funds in the fourth quarter, the aggregate 13F shares held increased to about 61.0 million from 59.4 million, an increase of approximately 2.8%. Of the hedge funds, 29 created new positions, 77 added to an existing holding, 30 exited, and 59 reduced their stakes. With aggregate holdings increasing by about 2.4% to approximately 166.5 million from 162.6 million, institutions were also buying.
Analysts expect to see revenue rise over the next two years for this enterprise cloud applications company, with increases in growth from 2022 to 2023 that could bring earnings to $2.81 by January 2022 and $3.49 by January 2023. This prediction for strong growth could bring revenue to $4.99 billion in 2022 and then continue to rise to approximately $5.9 billion in 2023.
Investment firms are optimistic about the stock, raising ratings, and recognizing future growth opportunities. JMP Securities analyst Patrick Walravens raised Workday’s price target to $310 from $296, maintaining an Outperform rating on shares. Also, Alex Zukin of Wolfe Research initiated coverage on Workday with an Outperform rating and $300 price target. The analyst cited opportunities for near-term acceleration and long-term durable growth potential.
Workday’s optimistic future estimates and hedge funds that are buying are encouraging metrics for investors. The company has shown strong growth over the past year amidst the pandemic. This leader in enterprise cloud applications appears well-positioned to meet changing customer needs.