10 Best Information Technology Services Stocks to Buy

4. Workday, Inc. (NASDAQ:WDAY)

Number of Hedge Fund Holders: 83

Workday, Inc. (NASDAQ:WDAY) is a leading global provider of enterprise cloud applications for finance and human resources. Founded in California in 2005, Workday offers solutions in financial management, human capital management, and analytics to companies, educational institutions, and government agencies.

Workday, Inc. (NASDAQ:WDAY) recently announced strong results for its fiscal 2025 first quarter, which ended on April 30, 2024. The company reported total revenue of $1.99 billion, reflecting an 18.1% year-over-year increase. Additionally, Workday’s earnings per share reached $1.74, surpassing estimates of $1.58. Notably, Workday, Inc. (NASDAQ:WDAY) has consistently exceeded EPS estimates over the past four quarters.

Despite these strong results, some analysts believe that there might be some causes for concern. On May 25, TD Cowen lowered its price target for Workday, Inc. (NASDAQ:WDAY) shares to $290 from the previous $330, while maintaining a Buy rating. This adjustment followed Workday’s announcement of a $5 million subscription revenue beat and customer relationship planning order (cRPO) growth that met expectations at 18%. However, Workday, Inc. (NASDAQ:WDAY)’s management has noted increased scrutiny on larger deals and signs of slower-than-anticipated headcount growth commitments in certain industry sectors during renewals. As a result, the company slightly reduced its revenue guidance for fiscal year 2025. Similarly, KeyBanc adjusted its price target for shares of WDAY to $275 from the previous $330, despite maintaining an Overweight rating on the stock.

Here’s what ClearBridge Investments said about Workday, Inc. (NASDAQ:WDAY) in its Q1 2024 investor letter:

“We also sold our remaining position in data monitoring software maker Splunk (splk) ahead of its acquisition by Cisco Systems. Part of the proceeds were redeployed into enterprise resource planning and finance software maker Workday, Inc. (NASDAQ:WDAY), as we believe its products are well-positioned for consistent, robust subscription growth with potentially further upside as new investment initiatives scale.”