On Wednesday, Stifel, a financial services firm, upgraded shares of Workiva (NYSE:WK), a provider of cloud-based compliance and regulatory reporting solutions, from Hold to Buy. The firm also raised its price target on the company's stock from $102.00 to $130.00. The stock, currently trading at $109.29, has shown remarkable momentum with a 55.64% return over the past six months. According to InvestingPro, the stock is trading near its 52-week high of $109.91.
The upgrade was influenced by a positive outlook on Workiva's core subscription business, which Stifel views as a robust and sustainable growth segment. The firm anticipates that the business could see growth in the mid-to-upper teens percentage range, with potential to reach into the low 20% range.
This projection aligns with the company's current performance, as InvestingPro data shows revenue growth of 16.18% and an impressive gross profit margin of 76.72%. This potential growth is attributed to several factors including improvements in sales execution, regulatory tailwinds in Europe, and a more favorable capital markets cycle.
Stifel's analysis suggests that even if Workiva does not achieve over 20% subscription growth, the company's consistent revenue growth in the teens, combined with margin expansion and disciplined capital allocation, positions it to attain an enterprise value to revenue (EV/Rev) multiple in the high single digits.
The firm's commentary reflects a belief in the strength and consistency of Workiva's financial performance. Stifel's upgraded rating and price target reflect an expectation of continued growth and value creation for the company's shareholders. The new price target of $130.00 represents a significant increase from the previous target of $102.00, indicating a more bullish stance on the stock's future performance.
In other recent news, Workiva, a cloud-based software provider, has reported its third-quarter financial results and provided an outlook for the fourth quarter and full year of 2024. The earnings call, which included CEO Julie Iskow and CFO Jill Klindt, did not highlight any specific bearish aspects, but suggested optimism about Workiva's future performance.
In addition, Baird and BMO Capital Markets have maintained their Outperform ratings on Workiva shares, raising the stock's price target to $130 and $120 respectively, reflecting confidence in the company's growth prospects. Both firms anticipate Workiva playing a significant role for large companies in Europe preparing for the Corporate Sustainability Reporting Directive (CSRD) set to take effect in 2025.
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