Workday (NasdaqGS:WDAY) Announces US$1 Billion Buyback Amid Earnings And Revenue Growth

Workday (NasdaqGS:WDAY) reported a 23% share price increase over the past month, amidst challenging market conditions with significant declines in major tech stocks. The company's robust earnings, despite a decrease in net income, and optimistic forward guidance, provided a positive counterpoint to the broader market downturn. Moreover, Workday's new $1 billion share buyback program likely supported investor confidence. As tech stocks faced headwinds from global trade tensions and policy shifts, these factors may have positively influenced Workday's performance, enhancing its appeal compared to the broader market and allowing it to rise against the decline seen in major indices.

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The recent 23% surge in Workday's share price amidst broader market declines highlights investor confidence driven by a strong earnings report and a new $1 billion share buyback program. This positive momentum aligns with Workday's strategic expansion into AI and international markets, setting the stage for potential revenue growth. Over the past three years, Workday's total return reached 61.80%, demonstrating strong long-term performance, though it underperformed compared to the US market's 10.5% return over the past year. In contrast, the company underperformed the US Software industry, which saw a 15.5% return in the same timeframe.

The news of upbeat earnings projections and restructuring efforts may influence future revenue forecasts and margin expectations, despite challenges such as macro headwinds and currency fluctuations. Analysts anticipate a 27.5% annual increase in earnings over the next three years, backed by burgeoning demand for AI-related products. With the share trading at $247.79, there's a 17% discount to the consensus price target of $298.61. This gap suggests potential upside if Workday can achieve the anticipated revenue of $12.2 billion and earnings of $1.6 billion by 2028, although achieving a PE ratio of 65.0x by then remains a significant challenge compared to the current industry average of 33.3x.

Explore Workday's analyst forecasts in our growth report.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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