Workday, the human-resources software provider, has announced its solid quarterly results and an optimistic outlook for the future. Analysts have responded by increasing their stock price targets, citing strong demand and the potential of artificial intelligence.
In the second fiscal quarter, which ended in July, Workday reported earnings per share of $1.43 from sales of $1.787 billion. This exceeded analyst expectations of $1.26 per share on $1.774 billion.
Furthermore, Workday has raised its guidance for fiscal 2024 subscription revenue, now expecting it to be in the range of $6.570 billion to $6.590 billion. This represents an 18% year-over-year growth. The previous guidance was $6.550 billion to $6.575 billion.
As a result of these positive developments, Workday stock experienced a nearly 3% increase, reaching $231.42 in premarket trading on Friday.
Workday’s management attributes the strong results to early customer renewals and the significant growth in its Financial Management business. Investments made in this division six months ago, including the hiring of additional sales staff, have paid off.
Siti Panigrahi, an analyst from Mizuho, maintained a Buy rating on the stock and raised his target price to $260 from $250. Panigrahi highlighted several factors that will drive growth in the long term, such as new additions in Financial Management, midmarket traction, and international expansion.
Approximately 25% of Workday’s total revenue comes from its international operations. The company has recently brought in new leadership for Europe, the Middle East, and Africa and plans to allocate more resources to the Asia-Pacific and Japan segment.
Scott Berg from Needham reiterated his Buy rating and increased his price target to $250 from $220. He believes there is great potential to capitalize on artificial intelligence within the platform due to the extensive amount of data available.
Overall, Workday’s strong quarterly performance and positive outlook have sparked optimism among analysts, leading to raised stock price targets. With a focus on its Financial Management business and international expansion, Workday is well-positioned for future growth.
