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The Zacks Analyst Blog Highlights Workday, CrowdStrike, Atlassian and Twilio
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For Immediate Release
Chicago, IL – January 17, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Workday (WDAY - Free Report) , CrowdStrike (CRWD - Free Report) , Atlassian (TEAM - Free Report) and Twilio (TWLO - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
4 Enterprise Software Stocks That Promise Gains in 2024
In a notable turnaround, enterprise software stocks, including Workday, CrowdStrike, Atlassian and Twilio, staged a remarkable comeback in 2023 after grappling with a significant sell-off in 2022. The 2022 sell-off was triggered by concerns over a potential recession, inflationary pressure, surging oil prices and elevated interest rates.
In 2023, Workday, CrowdStrike, Atlassian and Twilio stocks surged by impressive percentages of 65%, 142.5%, 84.9%, and 55%, respectively. WDAY, CRWD, TEAM and TWLO stocks decreased 38.8%, 48.6%, 66.3% and 81.4%, respectively, in 2022.
These enterprise software stocks not only recovered but also outperformed major U.S. stock market indexes, such as the Nasdaq Composite, Dow Jones Industrial Average and the S&P 500, which rose by 43.4%, 13.7%, and 24.2%, respectively, in 2023. All four stocks have notably surpassed last year’s gain of 54.7% in the Technology Select Sector SPDR, a crucial component of the broad market index.
Will the Momentum Continue in 2024?
Last year’s rally has been primarily driven by cooling inflationary pressure and declining gasoline prices, which have subsided the fears of a recession. The majority of tech players have also undertaken cost-cutting measures to counter the headwinds of softening demand and maintain profitability. Therefore, the tech sector is poised to continue the momentum in 2024 as the Federal Reserve has signaled three rate cuts this year.
The U.S. Federal Reserve's robust series of rate hikes, escalating from record-low levels in March 2022 to the current range of 5.25%-5.50%, contributed to stock market challenges, particularly impacting growth-oriented companies. The Fed’s shift in stance from an aggressive monetary policy to a dovish policy is going to boost investor sentiments.
Moreover, the success of OpenAI's ChatGPT has underscored the potential of AI technology to enhance operations across various industries. The rise of generative AI, capable of producing diverse content like text, imagery, audio and synthetic data, has fueled optimism about long-term growth prospects. This has contributed to a surge in share prices for companies involved in AI-related technologies and solutions, marking a potentially significant phase in the ongoing AI boom.
The latest forecast for worldwide IT spending by Gartner indicates bright prospects for tech stocks in the near term. Despite the ongoing macroeconomic and geopolitical challenges, the independent research firm forecasts worldwide IT spending to increase 8% year over year to $5.1 trillion in 2024. The Gartner report also states that spending on software will mark the highest increase with 13.8% growth.
Invest in Enterprise Software Stocks
Considering the probable new demand for enterprise software integrated with generative AI features and a possible improvement in overall IT spending, we believe that there is still significant upward potential left in WDAY, CRWD, TEAM and TWLO stocks. Therefore, investors should invest in stocks that are fundamentally strong and can sustain market jitters and ensure solid portfolio returns.
These enterprise software stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy). The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 and a Growth Score of A or B offer solid investment opportunities.
Our Picks
Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (“HCM”) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by the high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers.
Additionally, Workday is putting a strong focus on integrating advanced AI and machine learning capabilities. The ongoing AI-powered product development emphasizes natural language generation, content search, summarization, content augmentation and document understanding. This augurs well for the long-term growth of the company.
In late September 2023, the company introduced state-of-the-art AI-powered features to enhance the capability of the Workday Adaptive Planning solution. The newly introduced generative AI capability enables planners to validate unlimited scenarios with ease before implementing them into the operational workflow. Leveraging machine learning models, its predictive forecaster rapidly generates demand forecasts within a user-friendly interface.
The stock carries a Zacks Rank #2 and a Growth Score of A at present. The Zacks Consensus Estimate for WDAY’s fiscal 2024 earnings is pegged at $5.71 per share, up by 13 cents over the past 60 days. This indicates year-over-year growth of 56.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. The company is benefiting from the rising demand for cyber-security solutions due to a slew of data breaches and the increasing need for security and networking products amid the growing hybrid working trend.
Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions such as Bionic and Reposify are expected to fuel growth.
CrowdStrike's commitment to staying at the forefront of technological advancements is evident in its strategic investments in generative AI. In late November 2023, CrowdStrike introduced Charlotte AI, which is fueled by generative AI capabilities. Charlotte AI refines threat analysis, ensuring proactive defense against evolving cyber risks. This augurs well for the long-term growth of the company.
The stock currently carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for fiscal 2024 earnings has been revised upward by 13 cents in the past 60 days to $2.95 per share, which calls for an increase of 91.6% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 36.1%.
Atlassian is benefiting from the rising demand for remote working tools amid the hybrid work trend and accelerated digital transformation. An improvement in product quality and performance, multiple product launches, transparent pricing and a unique sales strategy are upsides. The expansion of its product portfolio through acquisitions is expected to accelerate growth momentum. Also, integration with leading applications like Dropbox and Adobe, along with partnerships, is likely to expand its paying-user base.
Atlassian’s latest focus on adding AI features to some of its collaboration software is likely to drive the top line over the long run. In 2023, the company collaborated with OpenAI to enhance the capabilities of its Confluence, Jira Service Management and other programs with generative AI features.
Currently, Atlassian carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for TEAM’s fiscal 2024 earnings has been revised downward by a penny to $2.38 per share over the past 30 days, suggesting a year-over-year increase of approximately 24%.
Twilio provides cloud communications platform-as-a-service. The company enables developers to build, scale and operate real-time communications within software applications. Twilio is benefiting from accelerated digital transformations amid a growing hybrid working trend. Its selective acquisitions and strategic investments in businesses and technologies are enhancing its product portfolio and fortifying its global presence.
It is not only gaining traction from a solid expansion of its existing clientele but also from first-time deals with new customers due to its firm focus on introducing products and its go-to-market sales strategy. The company’s ongoing cost-saving initiatives are driving profits and margins, which is praiseworthy.
Twilio is focusing on generative AI offerings to tap the growing opportunities in the space. In this regard, the company launched Customer AI technology in early June 2023, which powerfully combines customer engagement platform data, generative and predictive AI, and large language models to unlock stronger customer relationships for brands. It is also integrating generative AI capabilities across its platform and every customer touch point. The company’s initiative to integrate generative and predictive AI technology across its platform will boost its revenue growth over the long run.
Currently, Twilio carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for TWLO’s 2024 earnings has been revised upward by a couple of cents to $2.38 per share over the past seven days, suggesting a year-over-year increase of approximately 9.9%.
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Workday, CrowdStrike, Atlassian and Twilio
For Immediate Release
Chicago, IL – January 17, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Workday (WDAY - Free Report) , CrowdStrike (CRWD - Free Report) , Atlassian (TEAM - Free Report) and Twilio (TWLO - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
4 Enterprise Software Stocks That Promise Gains in 2024
In a notable turnaround, enterprise software stocks, including Workday, CrowdStrike, Atlassian and Twilio, staged a remarkable comeback in 2023 after grappling with a significant sell-off in 2022. The 2022 sell-off was triggered by concerns over a potential recession, inflationary pressure, surging oil prices and elevated interest rates.
In 2023, Workday, CrowdStrike, Atlassian and Twilio stocks surged by impressive percentages of 65%, 142.5%, 84.9%, and 55%, respectively. WDAY, CRWD, TEAM and TWLO stocks decreased 38.8%, 48.6%, 66.3% and 81.4%, respectively, in 2022.
These enterprise software stocks not only recovered but also outperformed major U.S. stock market indexes, such as the Nasdaq Composite, Dow Jones Industrial Average and the S&P 500, which rose by 43.4%, 13.7%, and 24.2%, respectively, in 2023. All four stocks have notably surpassed last year’s gain of 54.7% in the Technology Select Sector SPDR, a crucial component of the broad market index.
Will the Momentum Continue in 2024?
Last year’s rally has been primarily driven by cooling inflationary pressure and declining gasoline prices, which have subsided the fears of a recession. The majority of tech players have also undertaken cost-cutting measures to counter the headwinds of softening demand and maintain profitability. Therefore, the tech sector is poised to continue the momentum in 2024 as the Federal Reserve has signaled three rate cuts this year.
The U.S. Federal Reserve's robust series of rate hikes, escalating from record-low levels in March 2022 to the current range of 5.25%-5.50%, contributed to stock market challenges, particularly impacting growth-oriented companies. The Fed’s shift in stance from an aggressive monetary policy to a dovish policy is going to boost investor sentiments.
Moreover, the success of OpenAI's ChatGPT has underscored the potential of AI technology to enhance operations across various industries. The rise of generative AI, capable of producing diverse content like text, imagery, audio and synthetic data, has fueled optimism about long-term growth prospects. This has contributed to a surge in share prices for companies involved in AI-related technologies and solutions, marking a potentially significant phase in the ongoing AI boom.
The latest forecast for worldwide IT spending by Gartner indicates bright prospects for tech stocks in the near term. Despite the ongoing macroeconomic and geopolitical challenges, the independent research firm forecasts worldwide IT spending to increase 8% year over year to $5.1 trillion in 2024. The Gartner report also states that spending on software will mark the highest increase with 13.8% growth.
Invest in Enterprise Software Stocks
Considering the probable new demand for enterprise software integrated with generative AI features and a possible improvement in overall IT spending, we believe that there is still significant upward potential left in WDAY, CRWD, TEAM and TWLO stocks. Therefore, investors should invest in stocks that are fundamentally strong and can sustain market jitters and ensure solid portfolio returns.
These enterprise software stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy). The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 and a Growth Score of A or B offer solid investment opportunities.
Our Picks
Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (“HCM”) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by the high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers.
Additionally, Workday is putting a strong focus on integrating advanced AI and machine learning capabilities. The ongoing AI-powered product development emphasizes natural language generation, content search, summarization, content augmentation and document understanding. This augurs well for the long-term growth of the company.
In late September 2023, the company introduced state-of-the-art AI-powered features to enhance the capability of the Workday Adaptive Planning solution. The newly introduced generative AI capability enables planners to validate unlimited scenarios with ease before implementing them into the operational workflow. Leveraging machine learning models, its predictive forecaster rapidly generates demand forecasts within a user-friendly interface.
The stock carries a Zacks Rank #2 and a Growth Score of A at present. The Zacks Consensus Estimate for WDAY’s fiscal 2024 earnings is pegged at $5.71 per share, up by 13 cents over the past 60 days. This indicates year-over-year growth of 56.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Workday, Inc. price-consensus-chart | Workday, Inc. Quote
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. The company is benefiting from the rising demand for cyber-security solutions due to a slew of data breaches and the increasing need for security and networking products amid the growing hybrid working trend.
Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions such as Bionic and Reposify are expected to fuel growth.
CrowdStrike's commitment to staying at the forefront of technological advancements is evident in its strategic investments in generative AI. In late November 2023, CrowdStrike introduced Charlotte AI, which is fueled by generative AI capabilities. Charlotte AI refines threat analysis, ensuring proactive defense against evolving cyber risks. This augurs well for the long-term growth of the company.
The stock currently carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for fiscal 2024 earnings has been revised upward by 13 cents in the past 60 days to $2.95 per share, which calls for an increase of 91.6% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 36.1%.
CrowdStrike price-consensus-chart | CrowdStrike Quote
Atlassian is benefiting from the rising demand for remote working tools amid the hybrid work trend and accelerated digital transformation. An improvement in product quality and performance, multiple product launches, transparent pricing and a unique sales strategy are upsides. The expansion of its product portfolio through acquisitions is expected to accelerate growth momentum. Also, integration with leading applications like Dropbox and Adobe, along with partnerships, is likely to expand its paying-user base.
Atlassian’s latest focus on adding AI features to some of its collaboration software is likely to drive the top line over the long run. In 2023, the company collaborated with OpenAI to enhance the capabilities of its Confluence, Jira Service Management and other programs with generative AI features.
Currently, Atlassian carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for TEAM’s fiscal 2024 earnings has been revised downward by a penny to $2.38 per share over the past 30 days, suggesting a year-over-year increase of approximately 24%.
Atlassian Corporation PLC price-consensus-chart | Atlassian Corporation PLC Quote
Twilio provides cloud communications platform-as-a-service. The company enables developers to build, scale and operate real-time communications within software applications. Twilio is benefiting from accelerated digital transformations amid a growing hybrid working trend. Its selective acquisitions and strategic investments in businesses and technologies are enhancing its product portfolio and fortifying its global presence.
It is not only gaining traction from a solid expansion of its existing clientele but also from first-time deals with new customers due to its firm focus on introducing products and its go-to-market sales strategy. The company’s ongoing cost-saving initiatives are driving profits and margins, which is praiseworthy.
Twilio is focusing on generative AI offerings to tap the growing opportunities in the space. In this regard, the company launched Customer AI technology in early June 2023, which powerfully combines customer engagement platform data, generative and predictive AI, and large language models to unlock stronger customer relationships for brands. It is also integrating generative AI capabilities across its platform and every customer touch point. The company’s initiative to integrate generative and predictive AI technology across its platform will boost its revenue growth over the long run.
Currently, Twilio carries a Zacks Rank #2 and has a Growth Score of A. The Zacks Consensus Estimate for TWLO’s 2024 earnings has been revised upward by a couple of cents to $2.38 per share over the past seven days, suggesting a year-over-year increase of approximately 9.9%.
Twilio Inc. price-consensus-chart | Twilio Inc. Quote
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.