Workday Shines Through Industry 'Storm Clouds': What 6 Analysts Think Of Q2 Print

Shares of Workday Inc WDAY rose in early trading on Friday, after the company reported its fiscal second-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Needham On Workday: Analyst Scott Berg maintained a Buy rating while raising the price target from $220 to $250.

Workday reported “strong” results for its fiscal second quarter, “with a consistent 0.7% subscription revenue beat and upside non-GAAP operating margin while attaining GAAP profitability for the first time,” Berg said in a note.

“We are positive on the company's ability to expand monetization of AI through their massive 65mm user dataset and ultimately build out an even stronger competitive advantage,” he added.

Morgan Stanley On Workday: Analyst Keith Weiss reiterated an Overweight rating while lifting the price target from $250 to $260.

“The benefits of a broadening solution set, improving sales execution and tighter focus on efficiency yielded solid Q2 results, despite the constrained spending environment,” Weiss wrote in a note.

He mentioned that there were “several tailwinds,” including improving sales execution, “the broadening solution portfolio and sales focus,” and GenAI becoming a “catalyst to application modernization.”

Piper Sandler On Workday

Analyst Brent Bracelin reaffirmed an Overweight rating, while raising the price target from $280 to $288.

Workday’s quarter results were “rock solid,” with better-than-expected revenues, “driven by 19% y/y subscription growth (vs. our 18% estimate) and durable 24-mo subscription backlog growth of 21%-22% for seven consecutive quarters,” Bracelin said.

“WDAY has become a software lighthouse in the midst of macro uncertainty storm clouds,” he stated. “New leadership and AI features should get additional exposure at the Workday Rising analyst session next month,” the analyst further wrote.

Check out other analyst stock ratings.

KeyBanc Capital Markets On Workday: Analyst Michael Turits maintained an Overweight rating while lifting the price target from $290 to $295.

Workday delivered a beat and raise quarter, “on the key cRPO (24-month backlog) metric” and “impressively consistent results amid macro headwinds,” Turits said in a note.

“We're encouraged by the resilience of Workday's back office business to date and by early go-to-market initiatives from co-CEO Carl Eschenbach including an increased push into the international market and by a rise in full platform deployments of both HCM and Fins, and continue to see catalysts for HCM/Financial modernization projects,” the analyst wrote.

Goldman Sachs On Workday: Analyst Kash Rangan reiterated a Buy rating and price target of $260.

Workday reported “solid” quarterly results, 16% year-over-year revenue growth and better-than-expected operating margins of 23.6%, Rangan said.

“Seeing momentum for its quick time-to-value add-on offerings (Peakon, Planning, Talent Optimization) while driving strong FINs unit growth and scaling two verticals to $1bn (Retail and hospitality) provided a positive pulse of near-term demand and likely underpinned the raise in FY24 revenue guidance (+$18mn at the midpoint vs +$11mn beat),” the analyst wrote.

William Blair On Workday: Analyst Matthew Pfau reaffirmed an Outperform rating on the stock.

Workday's second-quarter results came in ahead of consensus on subscription revenue, total revenue, non-GAAP operating income, and 24-month backlog,” Pfau wrote in a note. “The strong performance was driven by both new customer wins and strong sales back to the base,” he added.

“The company also increased full-year subscription revenue and non-GAAP operating margin guidance,” the analyst said.

WDAY Price Action: Shares of Workday had risen by 4.50% to $234.99 at the time of publication Friday.