Workday (WDAY) provides enterprise-level software solutions, particularly for the financial management and human resource domains. Strong demand for its cloud-based Human Capital Management (HCM) and financial management solutions are fueling the company’s growth.

Moreover, a strong balance sheet and laudable cash flow-generating ability should prompt strategic growth initiatives in the long haul, which makes me bullish on the company.

Additionally, Workday’s outlook for subscription revenues for fiscal 2022 reflects a strong backlog and impressive pipeline. (See Workday stock chart on TipRanks)

The company recently held a Virtual Analyst Day, where Needham analyst Scott Berg was one of the attendees. He exited the event with strengthened optimism about Workday’s prospects and maintained a Buy rating on the stock. He also raised his price target to $310 from $290.

Berg believes that Workday is well-positioned to re-accelerate growth in the post-pandemic period. He noted that the company seems to be on track to achieve its $10 billion-by-2025 target, which leads Berg to expect a subscription growth rate of more than 20% for the company.

The analyst identified sustained cross-sell success, expanding global penetration of HCM, and growing adoption of financial management solutions in new and existing customers, as key growth drivers that can carry the company to its target revenue.

“We think the company will increase its focus on key customer growth segments, including medium enterprise, state and local government, and verticals such as Financial Services and Healthcare,” said Berg.

Notably, Workday's total TAM (total addressable market) has grown 20% since 2019, to $105 billion currently, with the addition of verticals such as spend management, employee experience, platform, and accounting center. In the analyst day event, Workday noted that the total HCM TAM of $38B is less than 10% tapped.

Moreover, Berg notes that the company has successfully achieved a sales balance between HCM and financial solutions, and is no longer dependent only on the latter. The opportunity for growth of HCM is significant in the mid-market, despite strong competition.

The consensus rating for Workday is a Strong Buy, based on 20 Buys and 2 Holds. The average Workday price target of $308.81 indicates an upside potential of 14.1%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Workday Working its Way to $10B; Street Impressed appeared first on TipRanks Financial Blog.

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By: Chandrima Sanyal
Title: Workday Working its Way to $10B; Street Impressed
Sourced From: blog.tipranks.com/workday-working-its-way-to-10b-street-impressed/
Published Date: Thu, 23 Sep 2021 11:46:41 +0000

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