1 Growth Stock Down 32% to Buy on the Dip, According to Wall Street

 1 Rising stocks Down 32% to buy on dip, according to Wall Street

This month, Workiva (NYSE: WK ) joined the hundreds of publicly traded companies reporting their financial results for the second quarter of 2023. This season is especially important for investors as they watch how the corporate sector fares in a challenging economic environment.

Workiva, which develops software that helps businesses collect data for reporting purposes, impressed investors with its Q2 results, beating expectations on both the top and bottom lines. The company is targeting a new opportunity that involves helping customers report on their environmental, social and governance (ESG) impacts, which could be incredibly lucrative in the long term.

The Wall Street Journal tracks 10 analysts who cover Workiva stock, and those analysts are mostly bullish on its prospects. In fact, not a single analyst recommends selling. The stock is trading at a 52-week high after its Q2 report, but remains 32% below its all-time high set during the tech boom in 2021. Here's why investors should follow Wall Street's lead and buy it on the dip .

Workiva serves some of the world's largest companies

Running a large organization has never been easy, but modern technologies like cloud computing have made it even more difficult. Managers now have to oversee a workforce that could be scattered around the world, using hundreds of online applications to complete tasks. Tracking progress and workflows can be incredibly challenging, especially when it comes time to report to the executive team or even agencies like the Securities and Exchange Commission (SEC).

Managers often have information from multiple sources combined, which can lead to unreliable reports, and that's a problem Workiva solves. Its platform aggregates data from various online sources by connecting to popular applications such as Google Cloud Alphabet, Microsoft Excel, Salesforce and Snowflake .

Workiva serves as a single source of truth for the data stored in all these applications, and managers can easily view it on one platform. From there, Workiva provides hundreds of ready-made templates to speed up the reporting process, meaning managers can spend less time pushing paperwork and more time overseeing their teams.

Earlier this month, the company announced the integration of generative artificial intelligence (AI) into its platform. Customers will be able to choose any major language model or chatbot available through Microsoft Azure or Google Cloud that can be leveraged to further increase productivity. AI can be used to create reports, offer suggestions or even search for important information.

Workiva is the only company in the world that offers financial, compliance and ESG reporting on a single platform, which is especially beneficial for large, complex organizations. It serves 5,860 businesses worldwide, including tech giants like Alphabet and consumer goods giants like Coca-Cola.

Workiva's highest spending customer groups are growing the fastestWorkiva generated $155 million in revenue during the second quarter, an 18% year-over-year increase. It beat the company's previous forecast and beat Wall Street expectations as well.

The result was driven by strong growth in the company's highest-spending customer group, underscoring a surge in demand from large, complex organizations. The number of customers spending at least $300,000 per year on the Workiva platform – its highest category – grew by 40% year over year. This marked an acceleration compared to  and there was also an acceleration in growth between the $100,000-plus and $150,000-plus cohorts.

Workiva also beat its forecast on the bottom line. It told investors it could lose $26 million to $27 million in , but its net loss ended up being just $20.9 million. The company is carefully managing costs as they continue to increase, and its overall financial results for Q2 suggest that it is striking a good balance between growth and a shift towards profitability. Wall Street is bullish on Workiva and the ESG market may be the reason

Global governments continue to move toward requiring companies to report their impacts beyond their financial performance. For example, companies in the United Kingdom must disclose information in their annual reports under a framework proposed by the Task Force on Climate-Related Disclosures. This standard has also been adopted by most regions in Asia and the Pacific.

Companies in the US and Europe will follow similar rules from 2024 and 2025. Overall, the goal is for organizations to report not just to shareholders, but to all stakeholders on how their operations affect the environment and communities around them.

Workiva's ESG software will play a key role in helping customers meet these new regulations. Global consulting firm PwC reports that the ESG reporting software market was worth $10 billion in 2021, and with 12% annual growth projected to 2026, it could be worth over $17 billion by then. Given that Workiva is only $5.8 billion at the time of writing, this is a big market for it in the long term.

As I touched on above, The Wall Street Journal tracks 10 analysts covering Workiva stock. Seven of that group gave it the highest possible buy rating, with one in the overweight (bullish) camp and two recommending a hold. Not a single analyst recommends selling.That's a solid consensus, and given the scope of Workiva's future opportunities, it shouldn't come as a surprise. There could be an opportunity for investors to pounce right now, while the stock is still down 32% from its all-time high.

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In the ever-evolving stock market environment, opportunities often arise in the form of price dips that create favorable entry points for savvy investors. One such opportunity caught the attention of Wall Street analysts - a growth stock that saw a 32% decline. In this article, we'll dive into the details of this stock, examine the reasons for its recent decline, and discuss why Wall Street believes it is a promising investment choice for those looking for potential long-term gains.

Understanding the recent slump in growth stocks:

The growth stock in question, which we'll refer to as XYZ Inc., recently experienced a significant 32% drop in its share price. This sudden decline has led to concerns among investors and raised questions about the company's stability and growth prospects. However, closer examination reveals that the decline does not indicate fundamental weaknesses in society.

Reasons behind the decline:

Regarding the recent decline in the stock price of XYZ Inc. several factors contributed. Market volatility, industry-wide pressures and macroeconomic factors all played a role in the downward movement. Additionally, some profit-taking by short-term traders may have exacerbated this decline. It is important to note that these reasons are often transitory and can create attractive opportunities for long-term investors to enter the market at discounted prices.

The Wall Street View:

Wall Street analysts have shown strong interest in XYZ Inc. despite her recent setback. Their optimism stems from a thorough analysis of the company's fundamentals, growth trajectory and market position. While short-term swings can be worrisome, the underlying growth story remains intact, making this stock a compelling option for investors looking to capitalize on its potential.

Wall Street's optimism is based on XYZ Inc.'s solid financial results, innovative products and growing market share. Despite the recent downturn, the company continues to show strong revenue growth, healthy profit margins and a strong balance sheet. In addition, XYZ Inc. has consistently demonstrated its ability to adapt to changing market dynamics, a trait that bodes well for long-term success.

Analysts also point to broader industry trends that support XYZ Inc.'s growth potential. As the industry evolves and demand for its products/services remains strong, the company is well positioned to gain more market share and potentially provide significant returns to investors over time.

In the world of investing, market downturns can often serve as windows of opportunity for those with a long-term perspective. The recent 32% decline in growth stock XYZ Inc. has caught the attention of Wall Street analysts who are optimistic about the company's prospects. Despite near-term volatility and challenges, the underlying fundamentals and growth trajectory make XYZ Inc. an attractive option for investors looking for potential profits. As always, investors should do their own research and consider their risk tolerance before making any investment decision.