Workday Inc. (NASDAQ: WDAY) has confirmed the release date for its fiscal Q4 2022 earnings report, which will be on Monday, February 28, 2022, after market close.
What to look for
Earnings: Stockearning’s Estimated EPS for the fourth quarter is expected to be $0.19 per share. In the third quarter, the company had EPS of $1.1, bearing consensus estimates of $0.86 per share. Historical EPS Performance shows that the company has in the past 12 months beat estimates 26 times (72%) and missed ten times (27%).
Revenue: The company had revenue of $1.33 billion during the quarter, beating consensus estimates of $1.32 billion. Subscription revenue was $1.17 billion, a 21% YoY, with a 24-month subscription revenue backlog of 7.12 billion, an increase of 19.7% YoY. The company had a total subscription revenue backlog of 10.97 billion at the end of the quarter.
Stock movement: Workday shares have lost 28.3% since the company released its Q3 2022 earnings. Interestingly, the company’s shares have been DOWN 21 times out of the past 37 quarters. So, the historical price reaction suggests a 56% probability of the share price going DOWN following the fiscal Q4 2022 earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-5%, while the predicted volatility on the seventh day is +/-6%.
What analysts are saying: BMO Capital analyst Daniel Jester assumed coverage in Workday and revised its rating from market performance to outperform and slashed his price target from $330 to $295. According to Jester after a "tougher" FY22, he anticipates sales growth to eventually reaccelerate to 20%-plus on a consistent basis. According to Jester, given the sector's volatility, sales growth potential and margin support make the company an appealing "GARP" position.
Deutsche Bank analyst Brad Zelnick slashed his price target in the stock from $360 to $340 but maintained a buy rating on the stock. The analyst sees the software industry basics improving in 2022 "while maintaining a healthy regard for the market and economic environment." He believes the firm "sets up well from here" but advises a more balanced approach with higher value sensitivity than in previous years.
Barclays analyst Raimo Lenshcow slashed the price target on the stock from $345 to $318 and maintained a buy rating on the shares. The major challenge for software investors in 2022, according to the expert, is not about end demand, as there are "no issues there," but about the appropriate valuation level for the area. "Is it time to return to the long-term median, or should we aim for the recent highs, given the promising structural growth profile? We've arrived in the former camp," Lenschow told investors in a research note.
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