Shades of Workday report pleases investors, shares rise
2022.11.30 07:53
Shades of Workday report pleases investors, shares rise
Budrigannews.com – Workday shares (NASDAQ:) are up nearly 9% in pre-open trading on Wednesday following the company’s modestly increased full-year forecast and better-than-expected third-quarter earnings.
“There is no question that the current macro environment presents increased uncertainty, but, due to the great work of our employees and our continued innovation, we are confident in the long-term opportunity and our ability to navigate the road ahead,” stated Aneel Bhusri, co-founder, co-CEO, and chairman of Workday.
Workday adjusted EPS of $0.99 on revenue of $1.60 billion beat analyst expectations of $0.84 on revenue of $1.58 billion. Subscription revenue was up 22.3% year-over-year to $1.43B
The low end of Workday’s subscription revenue guidance has been raised from $5.40 billion to $5.555 billion, and the company has also increased its 2023 non-GAAP operating margin guidance to 19.2%.
A new stock buyback program for up to $500 million worth of Class A common stock was approved by the company’s Board of Directors, according to the announcement.
“Our refreshed standpoint mirrors the continuous energy in our business and the force of our plan of action, while proceeding to adjust the ongoing climate,” the organization said in an explanation.
Mizuho analysts lowered the price target from $220 to $200 per share in light of the declining peer average valuation multiple.
“Over the long term, we believe that Workday remains in a strong position to become the leading back-office suite vendor.”In a note to the client, they stated, “We reaffirm our Buy rating.”
Analysts at Morgan Stanley said that WDAY provided “conservative” guidance, allowing for better-than-expected performance.
“Workday once more adhered to the formula for a successful earnings call during a time of macro volatility by 1) delivering a strong quarter, 2) incorporating a more challenging macro environment into the outlook, and 3) assuring investors that operating margins and FCF will be protected.“
We see an attractive entry point to one of the core SaaS franchises in software with the stock trading at 4X EV/CY24 Sales or “18X EV/CY24 FCF,” they wrote in a client note.
