Pleasanton, California-based Workday, Inc. (WDAY) is a leading cloud-based provider of enterprise software for human capital management (HCM), financial management, adaptive planning, spend management, and analytics. Valued at a market cap of $63.2 billion, the company delivers real-time operational insights and seamless workflows for HR and finance teams.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and WDAY fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the software - application industry. The company's specialty lies in delivering AI and machine learning-powered solutions that automate workflows, predict workforce needs, and optimize financial operations. Its strong presence among large enterprises, including over 60% of the Fortune 500, underscores its market leadership and its subscription-based SaaS model ensures stable, recurring revenue and high customer retention.
This tech company has slipped 19.4% from its 52-week high of $294, reached on Dec. 9, 2024. Moreover, shares of WDAY have declined 6% over the past three months, considerably underperforming the iShares Expanded Tech-Software Sector ETF’s (IGV) 15.9% uptick during the same time frame.
In the longer term, Workday has gained 14.1% over the past 52 weeks, lagging behind IGV’s 26.2% rise over the same time frame. Moreover, on a YTD basis, shares of WDAY are down 8.2%, compared to IGV’s 6% return.
To confirm its bearish trend, WDAY has been trading below its 200-day moving average since late May, and has recently started trading below its 50-day moving average.
On May 22, WDAY released its Q1 results. The company’s revenue improved 12.6% year-over-year to $2.2 billion and marginally exceeded the consensus estimates. Moreover, its adjusted operating margin expanded by a solid 430 basis points, driving a 28.2% annual increase in its adjusted EPS to $2.23. The bottom-line figure also came in well above Wall Street estimates. However, despite delivering a better-than-expected performance, its shares crashed 12.5% in the subsequent trading session.
The sharp decline was not driven by company-specific factors but rather by broader market concerns. Trade tensions escalated after President Trump threatened a 25% tariff on Apple Inc. (AAPL) if iPhones were not produced in the U.S., dragging down Apple and other tech stocks including WDAY. The pressure intensified after Trump also warned of a 50% tariff on goods imported from the European Union since Jun. 1.
Workday has slightly lagged behind its rival, Dayforce Inc’s (DAY) 14.4% gain over the past 52 weeks. However, it has outpaced DAY’s 22.6% decline on a YTD basis.
Despite WDAY’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 37 analysts covering it, and the mean price target of $297.18 suggests a 25.5% premium to its current price levels.
