Workday Inc Class A
| Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
|---|---|---|---|
| LOCK|hD | LOCK|?<qx> | LOCK|!yG>x^f |
Workday: Cloud-Only ERP Platform’s High Switching Costs Support Wide Moat; Shares Undervalued
We are transferring coverage of Workday and maintaining the company's wide moat rating. Workday sells cloud-native human capital management, or HCM, and financial management platforms that assist with enterprises' back-office workflows. These systems handle critical day-to-day operations data, and customers usually stay with the same vendor for decades. Workday boasts a gross retention rate of over 95% and has had a net retention rate of over 100% for more than seven years in a row, underpinning high switching costs that support a wide economic moat. We are maintaining the company's $300 fair value estimate and currently view shares as undervalued.
