On Wednesday, Oppenheimer maintained its positive stance on Workday (NASDAQ:WDAY), reaffirming an Outperform rating and a price target of $300.00. The firm's analysis followed Workday's third-quarter financial results, which, despite being strong, were accompanied by a revenue forecast that fell short of consensus estimates.
The company did, however, report bookings that slightly exceeded expectations and secured significant contracts, including mega deals in the Public Sector and a Platform as a Service (PaaS) for a wellness platform with a large partner.
These deals are seen as strategic growth opportunities for Workday, although they contribute to slower revenue recognition, influencing the conservative revenue guidance.
The impact of these project scopes on revenue timing is cited as the reason for the guidance being below consensus expectations. The firm suggests that while Workday's shares might experience a short-term pullback due to the softer revenue outlook for the fourth quarter and fiscal year 2026, the third-quarter results reinforce the company's status as a sustainable and profitable growth business.
Workday's third-quarter performance included notable achievements in the Public Sector and the development of a PaaS with a significant partner, indicating expansion into new business areas. Despite the slower revenue recognition from these projects, the company continues to display robust fundamentals.
The analyst from Oppenheimer concluded by emphasizing the long-term prospects of Workday, stating that the company remains a strong business with the potential for durable, profitable growth. The firm's maintained Outperform rating reflects confidence in Workday's future performance despite the near-term revenue outlook adjustments.
In other recent news, Workday Inc (NASDAQ:WDAY). reported a 16% increase in third-quarter subscription revenue, reaching $1,559 million. However, the company adjusted its fiscal year 2026 subscription growth forecast to a slightly lower 14%. Goldman Sachs (NYSE:GS), despite cutting its target for Workday to $300, maintained its buy rating, citing potential benefits from a more favorable macroeconomic environment and traction in Workday's AI products. Needham held its $300 target on Workday stock, acknowledging the company's solid third quarter, but expressed caution regarding the company's future growth prospects.
Citi increased its price target for Workday to $287, maintaining a neutral rating and highlighting the company's AI expansion, while also flagging near-term risks. Guggenheim maintained its sell rating, expressing caution on subscription growth and valuation. BMO Capital reaffirmed its outperform rating, focusing on Workday's robust performance in key sectors and potential for strong free cash flow growth.
Furthermore, Workday has undergone leadership changes with Doug Robinson set to retire at the end of the fiscal year, and Rob Enslin joining as President and Chief Commercial Officer.
InvestingPro Insights
To complement Oppenheimer's analysis of Workday (NASDAQ:WDAY), recent data from InvestingPro offers additional context to the company's financial position and market performance. As of the last twelve months ending Q2 2025, Workday reported impressive revenue of $7.86 billion, with a solid growth rate of 17.07%. This aligns with the analyst's view of Workday as a sustainable growth business.
InvestingPro Tips highlight Workday's financial strength, noting that the company "holds more cash than debt on its balance sheet" and has "liquid assets exceed[ing] short term obligations." These factors contribute to the firm's financial stability, which is crucial as it pursues strategic growth opportunities in new sectors.
The company's gross profit margin stands at a remarkable 75.77%, which InvestingPro describes as "impressive gross profit margins." This high profitability supports Workday's ability to invest in new initiatives, such as the Public Sector deals and PaaS development mentioned in the article.
It's worth noting that Workday is "trading at a high earnings multiple," with a P/E ratio of 46.28. This valuation reflects market expectations for continued growth, aligning with Oppenheimer's optimistic outlook. Investors considering Workday might find value in exploring the additional 10 tips available on InvestingPro, which could provide further insights into the company's market position and potential.
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