NEW YORK (The Street) -- After better-than-expected results from cloud giant Salesforce.com (CRM), there's no question that competition for fast-growing markets like the cloud and Big Data has grown more fierce. Workday (WDAY), which has quickly asserted itself as a software-as-a-service (SAAS) specialist, isn't likely to be left behind.
Workday stock closed Friday at $92.18, up 0.39%. The shares are up 13% year to date, besting the broader averages. The average price target of $102 implies that, on average, analysts expect the stock to gain 10.6%, so there could still be money to make on the stock.
Sure, Salesforce continues to raise the bar. Its results were impressive, affirming why it has been the subject of acquisition rumors. But for all the same reasons Salesforce is coveted, Workday, headquartered Pleasanton, CA., has qualities that are also compelling.
Ahead of the company's first-quarter earnings results Tuesday, Workday stock looks like a solid bet to go higher once the results are known.
For starters, Workday is still moving towards high-margin businesses like human capital management solutions. Stronger-than-expected demand in these areas helped the company deliver earnings and revenue that grew of 37% and 71%, respectively, in the last fiscal year. And with year-over-year revenue growth averaging almost 70% in the past four quarters, Workday has shown no meaningful sign of slowing down.
Moreover, the company continues to enjoy strong pent-up demand for its services as evidenced by its high billings growth, which is projected to climb almost 60%. While revenue growth explains how well the company has sold products and services, the billings metric denotes the strength of future revenue, or commitments to buy that have yet to hit the books.