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BofA cuts Workday stock target, maintains buy rating

EditorAhmed Abdulazez Abdulkadir
Published 2024-05-16, 05:58 a/m

On Thursday, BofA Securities adjusted its outlook on Workday (NASDAQ:WDAY), a leading provider of enterprise cloud applications for finance and human resources. The firm's analyst has lowered the price target to $310 from the previous $330 while still maintaining a Buy rating on the stock.

The revision follows discussions with nearly a dozen partners to assess the first quarter's business activity and trends. These conversations indicate that Workday is experiencing stable and healthy deal activity, which aligns with the performance seen in the fourth quarter. Most partners reported results that were either better than or consistent with the previous quarter's outcomes.

The report highlights that Human Capital Management (HCM) continues to be a significant growth driver for Workday, with large customers increasingly choosing to consolidate various modules, including learning and performance management. This trend underscores Workday's strength in providing comprehensive HCM solutions.

Additionally, there has been an uptick in complete platform deals, combining HCM with Financial Management solutions (FINS), particularly within the commercial and mid-market segments. This suggests that Workday's integrated offerings are gaining traction among a broader range of businesses.

InvestingPro Insights

With the recent analysis by BofA Securities on Workday (NASDAQ:WDAY), investors may find additional context through real-time data and insights. As of the last twelve months as of Q4 2024, Workday boasts a strong market capitalization of $66.67 billion, underlining its significant presence in the industry. The company's P/E ratio stands at 47.83, which is considered high, yet it may be justified by its near-term earnings growth potential, as indicated by the low PEG ratio of 0.1. This suggests that investors are expecting earnings to grow at a much faster rate than what is currently priced into the stock.

Workday's commitment to financial health is reflected in its balance sheet, holding more cash than debt, which may offer resilience in uncertain market conditions. Additionally, a substantial 26 analysts have revised their earnings expectations upwards for the upcoming period, signaling confidence in the company's financial prospects. This aligns with the company's revenue growth, which has been reported at 16.78% for the last twelve months as of Q4 2024, a testament to its expanding market reach and operational efficiency.

For those seeking to delve deeper into Workday's performance and future potential, there are over 14 additional InvestingPro Tips available, providing a comprehensive analysis of the company's valuation multiples, stock volatility, and industry positioning. To gain access to these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. The next earnings date is set for May 23, 2024, which will be an important event for investors to watch, as it may provide further indications of the company's trajectory.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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