Workday rises, 'broad-based strength' seen in Q2 results, guidance
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Workday (NASDAQ:WDAY) shares rose more than 3% in pre-market trading on Friday after it reported second-quarter results and guidance, resulting in many Wall Street analysts praising the back-office software provider. 
Citi analyst Steven Enders, who has a neutral rating on Workday (WDAY), boosted his price target to $247 from $220, noting that despite a "challenging" deal environment, the company is executing in "impressive" fashion.
"Profitability and cash flows were solid, helped by both the topline upside, and timing of expenses/collections," Enders wrote in an investor note. "[Management outlined a stable macro environment] with the platform consolidation value prop resonating and strength in US enterprise expansion."
Workday (WDAY) raised its fiscal 2024 subscription revenue guidance as it now sees the metric coming in between $6.57B and $6.59B, up from a prior view of $6.55B to $6.575B. For the third-quarter, the company sees subscription revenue between $1.678B and $1.68B.
Morgan Stanley analyst Keith Weiss, who has an overweight rating on Workday (WDAY), also boosted his price target, moving to $260 from $250, noting that the company is benefiting from a "broadening solution set, improving sales execution and tighter focus on efficiency yielded."
"The prospect of durable 20% top-line growth, coupled with a heightened focus on efficiency driving further margins gains bolsters our conviction in a 25%+ [free cash flow compound annual growth rate] over the next three years," Weiss wrote in an investor note. "With the stock trading at 26X EV/CY24 FCF, we continue to see an attractive entry point for one of the core SaaS franchises in software." 
Monness, Crespi, Hardt analyst Brian White, who has a neutral rating on Workday (WDAY), said the company is "executing well" as evidenced by its "healthy" second-quarter and "respectable" outlook, but there are still concerns about the broader macro environment.
"The tone of the call was constructive with Workday highlighting continued deal scrutiny; however, the team is now more experienced in operating in this challenging environment," White wrote in an investor note.
In addition, White noted that the company's upcoming Workday Rising conference and analyst day are likely to show off new artificial intelligence-related innovations.

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