On Friday, Workday Inc. (NASDAQ:WDAY) shares edged lower by 3.59% despite posting better-than-expected fiscal third-quarter results. The company reported its most recent quarterly results Thursday after markets closed, beating the consensus for analyst expectations on revenue and earnings.
Workday announced FQ3 non-GAAP earnings per share of $1.10, beating the consensus for analyst expectations of $0.86. In addition, its GAAP earnings of $0.17 per share outperformed the expected loss per share of $0.17, while revenue for the period increased by 19.8% from the same quarter last year to $1.33 billion, outperforming the consensus Street forecast by $10 million.
The company also raised its FY2022 subscription revenue guidance to the range of $4.533 billion to $4.535 billion, representing approximately 20% Y/Y growth. It now expects FQ4 subscription revenue in the range of $1.216 billion to $1.218 billion, approximately 21% growth from last year.
Is it time to bet on WDAY growth?
From an investment perspective, Workday shares trade at a steep forward P/E ratio of 81.63, making it less attractive to value investors.
However, analysts expect its earnings per share to rise by 43.70% this year, before increasing at an average annual rate of 15.63% over the next five years.
Therefore, the stock could be an exciting option for long-term growth investors.
Source – TradingView
Technically, Workday shares seem to have recently plummeted to complete a downward breakout from an ascending channel formation. However, the stock is yet to reach oversold conditions whilst retaining a huge distance above the 100-day moving average.
Therefore, investors could target extended short-term declines at about $280.53, or lower at $268.61, while $296.75 and $308.01 are crucial resistance levels.
It is not too late to take some profits
In summary, although Workday shares are only up 32% this year, Friday’s post-earnings decline indicates a lack of short-term catalysts.
Therefore, with shares far from reaching oversold conditions, it may not be too late to take some profits.
The post Is it safe to buy Workday stock as shares plunge despite solid Q3 results? appeared first on Invezz.