Workday Rallies After Beating Low Expectations, Morgan Stanley Says Results are ‘Bullish’
2022.08.26 13:42
Workday Rallies After Beating Low Expectations, Morgan Stanley Says Results are ‘Bullish’
By Senad Karaahmetovic
Shares of Workday (NASDAQ:WDAY) are up more than 10% in early Friday trading after the application software company reported strong second-quarter results.
Workday reported an adjusted EPS of $0.83 on revenue of $1.54 billion to beat the consensus of $0.79 on sales of $1.52 billion. The adjusted operating margin came in at 19.6%, better than the 17.7% expected.
For this quarter, Workday expects subscription revenue of $1.418 billion to $1.420 billion, reflecting a growth of 21%.
The company reaffirmed its full-year subscription revenue forecast of $5.54 billion to $5.56 billion, which compares to the estimate of $5.54 billion. WDAY also raised its full-year operating margin guidance to 19.0% to reflect “the scalability of our model and our commitment to longer-term margin expansion”.
A Credit Suisse analyst cut the price target to $215 from $230 and remains Neutral-rated on WDAY stock despite “strong GQ2 revenue and profitability.”
“We are impressed by Workday’s results and go-to-market momentum this quarter—with new logo wins and improved upsell, the combination of which better positions the company to achieve durable subscription revenue growth over the near- and medium-term,” the analyst said in a client note.
A Morgan Stanley analyst said the results were “bullish.”
“A much better than feared Q2 should bolster investors’ confidence in the strategic importance of the Workday solutions and expanse of the market opportunity, while management adding conservatism to the 2H guide should help lower the perceived risk in the story, improving positioning,” the Morgan Stanley analyst wrote in a note.
