Workday (WDAY) stock slipped, then rose, Wednesday amid mixed reviews for its user conference and analyst day Tuesday.
Pleasanton, Calif.-based Workday has expanded from human capital management (HCM) software into financial management software, and other areas. Workday stock fell a fraction in morning trading in the stock market today before rallying to close the day up 1.2%, at 90.88 and hitting a 16-month high of 90.95. Shares have generally risen since breaking out a flat base at 80.10 in June.
At the Workday Rising conference Tuesday, the company was upbeat on competition vs. Oracle (ORCL) in HCM. Workday also announced a minor partnership with Microsoft (MSFT).
"While we didn't sense any fireworks, the understated tone was more Workday's style, and it was clear to us the underlying current was one of a confident growth outlook," said UBS analyst Brent Thill in a research report.
Keith Bachman, analyst at BMO Capital Markets, was upbeat on the outlook for Workday's financials software but said the stock price has gotten a bit high from a price-earnings ratio standpoint.
"After attending Workday's analyst day, we are more bullish on Workday's prospects to generate meaningful share gains in financials, and thus attractive revenue growth over the next few years," he said. "We believe that large financial wins could create lumpy billings growth. We like a lot about Workday, except valuation."
"The company announced two new financials customers in Panera (PNRA) and Denny's (DENN)," said Jefferies analyst John DiFucci in a report. "We believe the company is progressing with its financials product. Nonetheless, we believe that the majority of financials customers remain smaller enterprises."
IBD'S TAKE: Workday is a laggard in IBD's Computer-Software Enterprise group, which ranks No. 3 out of 197 industry groups. Paycom Software is the group's top-rated stock. Check out IBD Sector Leaders for top stocks in various groups.
Citigroup analyst Walter Pritchard, in a report, said the outlook for Workday's financials software remains iffy.
"We heard mixed inputs from partners on financials," he wrote. "While they shared longer-term optimism, many noted lack of near-term inflection driven by more reluctance from CFOs to change core systems."
Workday in July agreed to buy privately held Platfora, a provider of Big Data analytics and data discovery tools. In June, Workday acquired Zaption, a video learning services company.
"Workday expanded its addressable market to over $65 billion from over $60 billion a year ago," Drexel Hamilton analyst Brian White said in a report. "The biggest market opportunity for Workday remains in financials (over $27 billion), followed by analytics (over $19 billion), HCM (over $13 billion), payroll & projects (over $8 billion) and student (over $1 billion)."
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