Analyst Note| Julie Bhusal Sharma |
Wide-moat Workday exceeded FactSet expectations in its third-quarter results for both the top and bottom line. Management adjusted the range of their full-year 2023 outlook and provided preliminary guidance for fiscal 2024, reflecting Workday’s strong win momentum amid macroeconomic uncertainty. We view Workday as the long-term winner within enterprise resource planning in the future, as we expect cloud-first ERP vendors to “rebundle” the ERP modules that they themselves broke up when they were founded, when they originally catered to one portion of the ecosystem. We balance near-term headwinds with our long-term thesis for Workday and maintain our fair value estimate of $229 per share. With shares trading around $155 after hours (up about 9% upon results), we think shares are attractive.