Workday Shares Are a Top Pick as Market Overlooks Its Mission-Critical Nature; $229 FVE

Wide-moat Workday is one of our top picks in the technology sector, as our fair value estimate of $229 per share offers significant upside for long-term investors in this rarely discounted high-quality name. We believe Workday’s business will be resilient in weaker macroeconomic times, as its software is mission critical to the day-to-day operations of its customers—from monitoring finances to managing hirings. We think the market is overlooking the degree to which Workday software is mission critical on an absolute and relative basis, as SAP and Oracle shares have fallen by far less over the last six months than Workday’s shares that declined by nearly 30%. The cornerstone of our confidence in Workday's long-term success lies in our wide-moat rating and positive moat trend, both of which are informed by robust switching costs. We note to investors that a wide moat, positive trend rating is rare across our coverage, which makes Workday shares even more compelling. For these reasons, we think the market provides an uncommon opportunity to buy Workday shares.