Workday Stock Price Implosion: An Automatic Buy for AI Investors
Workday's tepid Q2 and FY guidance are likely cautious estimates that will be outperformed by wide margins, catalyzing an analyst upgrade cycle.
This story originally appeared on MarketBeat
Workday's (NASDAQ: WDAY) May stock price implosion is a signal for AI investors to buy. The drop was caused by a tepid guide that included an expectation for sustained and accelerating double-digit growth and comes with a high likelihood of being beaten. Not only has Workday outperformed its consensus estimates for top and bottom line results 99.5% of the time since 2020, but the Q2 outlook and reaffirmed 2025 guidance reflect none of the Q1 strength.
[content-module:CompanyOverview|NASDAQ:WDAY]
The Q1 strengths are substantial, including backlog growth, margin expansion, and free cash flow improvements. The takeaway for investors is that at $235, Workday's price offers a low risk-to-reward profile and potential catalyst for higher prices in upcoming earnings reports.
Analysts are a headwind in late Q2 but are helping to set up a stock price rebound for later in the year. Most revisions following the Q2 release are price target reductions, with the low end leading to the $250 level. The critical details are that this stock remains a Moderate Buy rated and the revision activity aligns with the consensus estimates.
The total and trimmed revisions average is $290, about $3 or 100 basis points below the consensus. Consensus forecasts an 18-month closing high, a 17% gain from the critical support level; the market catalyst will be a reversion to price target increases spurred by upcoming business strength.
Workday Builds Momentum in Q1 With Agentic AI and Automation
Workday had a solid quarter in Q1 with its core subscription business growing by 13.4%, driving a 12.6% top-line gain, 100 basis points better than MarketBeat's reported consensus. The strength is in long-term contracts and large clients, including increased business with names like Chipotle Mexican Grill and new business with names like United Airlines and Dover Corporation.
[content-module:Forecast|NASDAQ:WDAY]
Other strengths were seen in the margins. The company expanded its gross and operating margins due to improved revenue leverage and operational quality, driving a 430-basis-point increase in the adjusted operating margin and a significant improvement in cash flow and free cash flow.
Adjusted profit grew by 31% and adjusted earnings by 28%, outpacing the consensus by 1100 basis points, while cash flow increased by 22% and free cash flow by 44%. The critical takeaway is that the free cash flow is sufficient to cover the share buybacks and sustain the healthy balance sheet.
The guidance is the market's sticking point. The company reaffirmed the outlook for 2025 despite the Q1 strength, forecasting a weaker-than-consensus result in Q2. However, Q2 subscription revenue growth is predicted to accelerate, and the guidance is likely low. Details like the 15.6% increase in long-term subscription backlog and 19% increase in total subscription backlog suggest the outperformance could be substantial.
Workday's Balance Sheet Is a Fortress for Tech Investors to Take Shelter In
Workday's balance sheet is a fortress and getting stronger by the quarter. The improved cash flow allows for accelerating share repurchases, which are on the brink of overtaking dilutive actions, including share-based compensation.
Highlights at the end of Q1 include reduced cash and total assets, flat equity and share count, but leverage remains low, the company is net cash, and the stage is set for value gains later in the year.
The question now is what the institutions will do. The institutions own about 90% of the stock and are the primary force behind long-term market direction. They have been buying in 2025, but activity slowed in Q2. The post-release price plunge puts the market back into the institutional buying range.
If they fail to support the market now, this stock could fall below critical support and revert to previous lows.
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
See The Five Stocks Here
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Herc Holdings and H&E Equipment Services Announce Expiration of the Tender Offer to Acquire Shares of H&E Equipment Services and Expected Closing Date
BONITA SPRINGS, Fla. and BATON ROUGE, La., May 30, 2025 (GLOBE NEWSWIRE) -- Herc Holdings Inc. (NYSE: HRI) ('Herc' or 'the Company') and H&E Equipment Services, Inc. d/b/a H&E Rentals (NASDAQ: HEES) ('H&E') announced today the expiration of the tender offer to exchange each outstanding share of H&E common stock (the 'H&E Shares') for $78.75 in cash and 0.1287 shares of Herc common stock, in each case without interest (the 'Offer', and such consideration, the 'Offer Price'), pursuant to the terms of the previously announced merger agreement, dated February 19, 2025, between Herc, HR Merger Sub Inc. ('Merger Sub') and H&E (the 'Merger Agreement'). The Offer, which was extended on May 23, 2025, expired at one minute past 11:59 p.m. Eastern Time on May 29, 2025. The Depository and Paying Agent for the Offer has advised Herc that as of the expiration of the Offer, a total of 25,369,090 H&E Shares were validly tendered and not validly withdrawn in the Offer, representing approximately 69.33% of the outstanding H&E Shares. As of such expiration, all conditions to the Offer have been satisfied or waived and Merger Sub has accepted for payment all H&E Shares validly tendered and not validly withdrawn in accordance with the terms of the Offer (the 'Tendered Shares'). Herc, Merger Sub and H&E currently expect to close the acquisition on June 2, 2025. At the closing, Herc and Merger Sub will pay for all of the Tendered Shares. Additionally, the parties will consummate the merger of Merger Sub with and into H&E (the 'Merger'). As a result of the Merger, all of the H&E Shares other than the Tendered Shares will be converted into the right to receive the Offer Price in accordance with the terms of the Merger Agreement. As a result of the Offer and the Merger, H&E will become a wholly-owned subsidiary of Herc and H&E Shares will cease trading on the Nasdaq Stock Market. About Herc Holdings Inc. Founded in 1965, Herc Holdings Inc., which operates through its Herc Rentals Inc. subsidiary, is a full-line rental supplier with 453 locations across North America, and 2024 total revenues of approximately $3.6 billion. We offer products and services aimed at helping customers work more efficiently, effectively, and safely. Our classic fleet includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment. Our ProSolutions® offering includes industry-specific, solutions-based services in tandem with power generation, climate control, remediation and restoration, pumps, and trench shoring equipment as well as our ProContractor professional grade tools. We employ approximately 7,600 employees, who equip our customers and communities to build a brighter future. Learn more at and follow us on Instagram, Facebook and LinkedIn. About H&E Equipment Services, Inc. Founded in 1961, H&E is one of the largest rental equipment companies in the nation. H&E's fleet is comprised of aerial work platforms, earthmoving, material handling, and other general and specialty lines. H&E serves a diverse set of end markets in many high-growth geographies and has branches throughout the Pacific Northwest, West Coast, Intermountain, Southwest, Gulf Coast, Southeast, Midwest and Mid-Atlantic regions. Cautionary Note Regarding Forward Looking Statements This communication includes 'forward-looking statements,' within the meaning of Section 21E of the Securities Exchange Act, as amended. Forward-looking statements include statements related to the Company, H&E and the proposed acquisition of H&E by the Company that involve substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this communication include, among other things, statements about the potential benefits of the proposed transaction, the Company's plans, objectives, expectations and intentions, the financial condition, results of operations and business of each of the Company and H&E, expected valuation and re-rating opportunities for the combined company, and the anticipated timing of closing of the proposed transaction. Forward-looking statements are generally identified by the words 'estimates,' 'expects,' 'anticipates,' 'projects,' 'plans,' 'intends,' 'believes,' 'forecasts,' 'looks,' and future or conditional verbs, such as 'will,' 'should,' 'could' or 'may,' as well as variations of such words or similar expressions. All forward-looking statements are based upon our current expectations and various assumptions and apply only as of the date of this communication. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will be achieved or that the completion and anticipated benefits of the proposed transaction can be guaranteed, and actual results may differ materially from those projected. You should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking statements, including, but not limited to, (i) the Company's ability to implement its plans, forecasts and other expectations with respect to H&E's business after the completion of the proposed transaction and realized expected synergies; (ii) the ability to realize the anticipated benefits of the proposed transaction, including the possibility that the expected benefits from the proposed transaction will not be realized or will not be realized within the expected time period; (iii) the length of time necessary to consummate the proposed transaction may be longer than anticipated; (iv) problems may arise in successfully integrating the businesses of the Company and H&E, including, without limitation, problems associated with the potential loss of any key employees, customers, suppliers and other counterparties of H&E (v) the proposed transaction may involve unexpected costs, including, without limitation, the exposure to any unrecorded liabilities or unidentified issues during the due diligence investigation of H&E or that are not covered by insurance, as well as potential unfavorable accounting treatment and unexpected increases in taxes; (vi) the Company's business may suffer as a result of uncertainty surrounding the proposed transaction, any adverse effects on our ability to maintain relationships with customers, employees and suppliers; (vii) the occurrence of any event, change to other circumstances that could give rise to the termination of the merger agreement, the failure of the closing conditions included in the merger agreement to be satisfied, or any other failure to consummate the proposed transaction; (viii) any negative effects of the announcement of the proposed transaction of the financing thereof on the market price of the Company common stock or other securities; (ix) the industry may be subject to future risks including those set forth in the 'Risk Factors' section in the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and in the other filings with the SEC by each of the Company and H&E and (xi) Herc may not achieve its valuation or re-rating opportunities. The foregoing list of factors is not exhaustive. Investors should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of the Company and H&E, including those described in the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and in the other filings with the SEC by each of the Company and H&E. All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We undertake no obligation to update or revise forward-looking statements that have been made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Contacts For Herc Holdings Inc.: Leslie HunzikerSenior Vice PresidentInvestor Relations, Communications & For H&E Equipment Services, Inc.: Leslie S. MageeChief Financial Officer225-298-5261lmagee@ Jeffrey L. ChastainVice President of Investor Relations225-952-2308jchastain@ in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
25 minutes ago
- Yahoo
Here is Why New Fortress Energy (NFE) Fell This Week
The share price of New Fortress Energy Inc. (NASDAQ:NFE) fell by 8.82% between May 20 and May 27, 2025, putting it among the Energy Stocks that Lost the Most This Week. Let's shed some light on the development. A cutaway view of a modern energy infrastructure and its power generation facilities. New Fortress Energy Inc. (NASDAQ:NFE) owns and operates natural gas and LNG infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. New Fortress Energy Inc. (NASDAQ:NFE) continues to plunge after posting a wide earnings miss in its Q1 2025 earlier this month, struggling with weak performance across all its segments. The company's loss of $0.73 per share was significantly worse than market expectations, while its revenue also declined by over 31% YoY and fell below estimates. Investors also reacted negatively when it was revealed this week that the company has been disqualified from an auction held by the Puerto Rican government to secure temporary power generation. However, the latest blow for New Fortress Energy Inc. (NASDAQ:NFE) has come in the form of a notice it received from NASDAQ on non-compliance with the stock market's listing rule for not submitting its quarterly reports with the U.S. Securities and Exchange Commission. While we acknowledge the potential of NFE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NFE and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: 10 Cheap Energy Stocks to Buy Now and 10 Most Undervalued Energy Stocks to Buy According to Hedge Funds Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNN
28 minutes ago
- CNN
Stocks futures drop as Trump claims China has ‘violated' trade agreement
Stock futures fell Friday after President Donald Trump said China has 'totally violated' its trade agreement with the United States, sending another jolt to markets after a whiplash week of tariff developments. Dow futures were down 100 points, or 0.3%. S&P 500 futures and those tied to the Nasdaq 100 both slid 0.3%. 'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,' the president posted on social media. 'So much for being Mr. NICE GUY!' Wall Street has been cautious about the next steps in Trump's trade war. Stocks had received a boost this week after the Court of International Trade late Wednesday blocked most of Trump's tariffs on legal grounds, but that rally lost steam as traders bet the White House would aggressively appeal and pursue another legal strategy. A federal appeals court on Thursday paused the CIT's ruling to block Trump's tariffs, leaving the president's massive tariff agenda in limbo as the courts deliberate its legality. 'The stunning, head-spinning, mind-boggling trade fiasco will not be resolved quickly,' said Greg Valiere, chief US policy strategist at AGF Investments, in a note. 'It probably will land in the Supreme Court — and even that may not settle the issue.' Investors on Friday also digested fresh data that showed the Federal Reserve's preferred inflation gauge cooled in April slightly more economists had expected, but also revealed a significant drop in consumer spending. Trump has reignited his trade war in the past week, which has stirred up uncertainty in markets after Wall Street had begun to turn the page on tariff concerns. The S&P 500 has been steadily climbing out of an early April slump instigated by the president's back-and-forth on his 'reciprocal' tariffs. Despite the recent fluctuations, investors who sold at the start of May missed out on a historically strong month for markets. The benchmark index is up more than 6% this month and is on track for its best month since 2023 and its best performance in May since 1990. 'Even though the stock market has staged a decisive rebound since the April lows, there is still plenty of uncertainty on tariffs, especially given the legal battle that is brewing over the 'Liberation Day' tariffs,' said Clark Bellin, president and chief investment officer at Bellwether Wealth. The dollar slightly gained on Friday. Yet the US dollar index, which measures the dollar's strength against six major foreign currencies, is on track to end the month in the red. It would be the dollar's fifth month of decline in a row. 'We expect bouts of market volatility ahead as investors continue to navigate a range of market, economic and geopolitical risks,' said Ulrike Hoffmann-Burchardi, CIO of global equities at UBS Global Wealth Management, in a Thursday note. The benchmark S&P 500 is up about 0.5% this year. This is a developing story and will be updated.
