Shares of Workday Inc (NASDAQ:WDAY) tanked in early trading on Wednesday, even after the company reported upbeat third-quarter earnings.
Here are some key analyst takeaways:
- RBC Capital Markets analyst Rishi Jaluria maintained an Outperform rating, while reducing the price target from $340 to $320.
- KeyBanc Capital Markets analyst Jason Celino reiterated an Overweight rating, while cutting the price target from $285 to $260.
- Citizens JMP Securities analyst Patrick Walravens maintained a Market Outperform rating and price target of $315.
- Guggenheim Securities analyst John DiFucci reiterated a Neutral rating and price target of $285.
- Needham analyst Scott Berg reaffirmed a Buy rating and price target of $300.
Check out other analyst stock ratings.
RBC Capital Markets: Workday reported revenues of $2.432 billion and non-GAAP earnings of $2.32 per share. That’s higher than consensus of $2.415 billion and $2.17 per share, respectively.
"We remain encouraged by early AI adoption trends and momentum with the partner network," Jaluria said in a note.
Although the company raised its full-year revenue guidance by more than the quarterly beat, its organic revenue would have fallen short of consensus, the analyst stated. Despite the quarterly beat, Workday reiterated its non-GAAP EBIT margin guidance, he added.
KeyBanc Capital Markets: Workday reported cRPO (current remaining performance obligations) growth of 17.6%, beating Street expectations of 15.6%, Celino said. He added, however, that the cRPO figure includes Paradox, which contributed more than 1 point of growth.
Revenues from both subscription and pro services were only modestly above consensus estimates, the analyst stated. Despite the outperformance, Workday's fourth-quarter outlook was broadly in-line with expectations, he added.
Citizens JMP Securities: Workday's third-quarter results were mainly higher than estimates, Walravens said. Although management guided to fourth-quarter subscription revenue of $2.355 billion and revenue from professional services of $168 million, slightly above consensus of $2.351 billion and $160 million, respectively, he added.
The company guided to fiscal 2026 non-GAAP operating margin of around 28.5%, below consensus of 28.7%, "which may be depressed slightly by the acquisitions, in our view," the analyst wrote. Workday's stock remains "an attractive opportunity for long-term capital appreciation," he further stated.
Guggenheim Securities: Workday reported its results and guidance largely in-line or slightly better than expectations, DiFucci said. The company seems to be better positioned currently than it was a few years ago, he added.
Workday has "engaged more intimately with partners, built out its product platform through inorganic and organic means, and successfully gone down market," the analyst wrote. He further stated that the company is consistently delivering 12%-15% subscription growth.
Needham: Workday's third-quarter sales were driven by the EMEA (Europe, the Middle East and Africa) and APAC (Asia-Pacific) regions, Berg said. The US federal government shutdown negatively impacted some deals, he added.
Sales of the company’s AI solutions "continue to be a tailwind" for cRPO growth, the analyst stated. "We continue to believe the Flex Credits introduction can drive incremental AI adoption in FY27 as customers gain more freedom to evaluate its AI functionality," he further wrote.
WDAY Price Action: Shares of Workday had declined by 10.66% to $208.79 at the time of publication on Wednesday.
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