Goldman Sachs’ List Of Stocks That Hedge & Mutual Funds Love & Hate: 28 Stocks On The Mutual and Hedge Funds Radar

6. Workday Inc. (NYSE:WDAY)

Number of Hedge Fund Holders In Q2 2024: 86

Category: Most popular with HFs and overweight among mutual funds

Workday Inc. (NYSE:WDAY) is a software as a service (SaaS) company that enables businesses to manage their financial and human resource management operations. Since the firm generates revenue by operating in the human resources market, it’s unsurprising that its shares are down by 9.5% year to date. This is because high rates and a tight economy have constrained business budgets which carries a two fold disadvantage for Workday Inc. (NYSE:WDAY). On one front, slower hiring means that its product is used less, while the second front sees businesses closely monitor their spending to save money. In fact, the ‘tighter scrutiny’ was at the heart of Workday Inc. (NYSE:WDAY)’s 15% share price drop in May as it outlined in its SEC filing that it had experienced “a moderation of revenue growth rates due to increased deal scrutiny and the lengthening of certain sales cycles, particularly within net new opportunities, and reduced growth in headcount level commitments upon renewals of existing customers.” However, Workday Inc. (NYSE:WDAY)’s 12.5% share price jump in August when not only did its Q2 revenue of $2.085 billion and EPS of $1.75 beat analyst estimates of $2.071 billion and $1.65 but it also added five percentage points to its 2027 margin goal for a 30% target value. Margins are key for SaaS stock valuation, and Workday Inc. (NYSE:WDAY) future is tied to hiring performance and its ability to meet its goals.

Parnassus Investments mentioned Workday Inc. (NYSE:WDAY) in its Q2 2024 investor letter. Here is what the fund said:

“Workday, Inc. (NASDAQ:WDAY), a provider of human capital and financial management software, warned of slower growth in subscription revenue even as first-quarter revenue and earnings topped expectations. We added to our position as it fell to a valuation that we believe does not reflect its revenue growth and increasing operating margins.”