Workday (WDAY) - Get Report shares were working hard and rising after a Goldman Sachs analyst added the shares of the financial-management and human-capital-management software vendor to the firm's Conviction List.
Analyst Heather Bellini wrote in a note to investors that she was including the Pleasanton, Calif., company's shares "as we continue to see a path towards outperformance over the course of the year, especially as we see a path for subscription revenue growth to accelerate in the back half of fiscal 2021 (calendar year 2020) as comparisons get easier."
The Conviction List is a group of stocks that Goldman's research team expects to outperform.
"Furthermore, while not modeled at this time," Bellini said, "we see the potential for subscription revenue growth to accelerate in fiscal 2022 (calendar 2021) as migration to cloud financials starts penetrating the F500 and as add-on products such as planning and analytics increase their penetration into the installed base."
Bellini said that investor concerns about the pace of deceleration in human capital management, Workday's cloud-based HR-management software, and a weaker-than-expected fiscal 2021 subscription revenue guide have weighed on recent performance.
"[But] our initial thesis remains intact and we think recent underperformance creates an even more attractive entry point for the stock," she wrote.
With the fiscal 2021 subscription guide out of the way, Bellini said, "we see room for outperformance over the course of the year and note Workday has historically raised subscription revenue guidance over the course of the year."
"While we believe the market has been overly optimistic about the pace of financials adoption in the past, our field work highlights accelerating momentum in this multiyear cycle of migrating financials to the cloud, while investors’ confidence level about adoption has become more muted," she said.
At last check Workday shares were 2.8% higher at $192.82. They're up 24% from their 52-week low around $151 in mid-October.