What Happened?
Shares of cloud reporting platform Workiva (NYSE: WK) jumped 2.6% in the afternoon session after investment firm BTIG initiated coverage on the company with a "Buy" rating and a $105 price target.
The research firm pointed to Workiva's loyal customer base, which showed high retention rates. This customer loyalty helped drive subscription revenue growth of about 20%. BTIG also noted that Workiva's management was on track to improve its profit margins in the coming years through disciplined hiring and more efficient spending on sales and marketing. The new coverage from analyst Allan Verkhovski marked a positive development for the company, which BTIG had not previously covered.
After the initial pop the shares cooled down to $89.63, up 2.5% from previous close.
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What Is The Market Telling Us
Workiva’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 26 days ago when the stock gained 3.1% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut.
The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he saw room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall.
Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.
Workiva is down 17.7% since the beginning of the year, and at $89.63 per share, it is trading 21.9% below its 52-week high of $114.78 from December 2024. Investors who bought $1,000 worth of Workiva’s shares 5 years ago would now be looking at an investment worth $987.22.
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