Analysts, Options Bears Pile on Workday Stock

Workday's guidance for 2020 and 2021 fell short of expectations

by Patrick Martin

Published on Dec 4, 2019 at 10:19 AM

The shares of Workday Inc (NASDAQ:WDAY) are down 5.2% to trade at $164.48 today, despite the software company reporting adjusted third-quarter earnings per share of 53 cents and $938.1 million in revenue, both of which topped analyst forecasts. Instead, Workday's weaker-than-expected 2020 fiscal outlook and subpar 2021 subscription revenue forecast is weighing on the shares today.

On top of that, no fewer than nine brokerage firms have come forward with price-target cuts, the lowest coming from Piper Jaffray, which slashed its estimate by $1 to $173. Jefferies called the preliminary 2021 outlook a "headscratcher," while J.P. Morgan Securities is still confident in WDAY's growth potential and ability to corner the software industry.

Workday stock is set to breach short-term support that had emerged at its 40-day moving average. And while the shares are still clinging to their year-to-date breakeven level, they've shed roughly 28% off their July 12 all-time high of $226.83. 

Options sentiment has been overwhelmingly bullish lately. This is according to data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows a 10-day call/put volume ratio of 2.04, a reading that ranks in the 83rd annual percentile. Looking closer, there's notable open interest at the December 190 call.

Shifting gears to today though, put trading has revved up. Just an hour into trading, over 9,423 puts have changed hands, 11 times the average intraday amount and volume pacing for the 100th percentile of its annual range. Leading the charge are the weekly 12/6 160- and 165-strike puts, with new positions being opened at both.

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