Workday's stock (NMS: WDAY) is up 6.83% today, having given up some of the further gains that immediately followed earnings in the after hours session. The stock had gained more than 11% in the extended hours, trading up close to $288 in the pre-market before paring some of the gains. Also off the back of earnings has come a price target hike from Bernstein, with the firm increasing to $348, up from $298, while maintaining an Outperform rating.
This bullish adjustment is largely attributable to Workday's strong financial performance in Q4, with a current remaining performance obligation (cRPO) beat and an encouraging Q1 guide. EPS came in at $1.92, for a $0.14 beat on the consensus. Revenue also came in above the street's expectations, with $2.21 billion reflecting a $30 million beat.
Bernstein's revised price target for Workday stems from a broader recognition of its solid Q4 achievements, particularly a beat on cRPO projections and favorable guidance for the first quarter. Additionally, the firm has reaffirmed its full-year revenue forecast and upgraded its full-year margin guidance.
The aftermarket surge in Workday's share value was seen as a relief rally, following a period of inconsistent results and tempered expectations across the software industry. Investors had been concerned that Workday's growth trajectory might deteriorate; however, Bernstein's update seems to have alleviated some of those worries, as indicated by the stock's robust aftermarket performance.
Workday operates within the technology sector, specifically the software application industry. The company offers a broad suite of financial management and human capital management applications, catering to various business needs, from accounting information management and expense oversight to talent acquisition and workforce development. The organization's well-rounded portfolio embraces planning applications, analytics, reporting offerings, and extends to custom application development via Workday Extend.
Company Performance and Analyst Targets
With a market capitalization hovering around $67.89 billion and shares fluctuating between a 52-week low of $199.81 and a high of $298.5, Workday's current price action is taking place closer to the upper end of the range.
In terms of financial health, Workday boasts a trailing P/E ratio of 131.56 and a forward P/E ratio of 30.75. These valuations are complemented by total revenues reaching approximately $8.45 billion and a net income to common of $526 million.
Analysts collectively hold a favorable view of Workday, advocating a buy recommendation with 37 opinions contributing to this consensus. The mean target price stands at $308.17, suggestive of the potential for continued price appreciation.
Workday's enhanced price target by Bernstein signifies a strong vote of confidence in the company's growth prospects. Alongside its Outperform rating, Workday appears primed for sustained performance in forthcoming quarters, bolstered by its consistent financial achievements and strategic positioning within the competitive tech landscape.
