Workday’s Outlook: Oppenheimer Reaffirms $300 Target Despite Restructuring Concerns

Oppenheimer reaffirmed its Outperform rating on Workday (WDAY) with a $300 price target, despite restructuring concerns and FX headwinds. The company’s Q4 FY2025 earnings report is expected in four days, with no major growth guidance changes anticipated. Workday’s 8.5% workforce reduction aims to enhance profitability, drawing mixed analyst reactions. Despite uncertainties, analysts see potential margin improvements supporting long-term growth.

CONTENTS:

• This Analyst Is No Longer Bullish on Workday: Here Are Wednesday’s Top 5 Downgrades
• Workday Receives Cautious Hold Rating Amid Growth Uncertainty and Valuation Concerns

Workday’s Outlook: Oppenheimer Reaffirms $300 Target Despite Restructuring Concerns

Oppenheimer has reaffirmed its Outperform rating on Workday (NASDAQ: WDAY) with a $300 price target, despite growing investor concerns. The stock is currently trading at $261.63, and analyst targets range from $250 to $350, according to InvestingPro data. While Workday maintains strong financial health, investor sentiment has been dampened by a major restructuring announcement and negative foreign exchange (FX) impacts, which could limit the upside in its calculated remaining performance obligations (CRPO) and FY2026 subscription revenue guidance.

The restructuring aims to enhance margins but has raised questions about sales efficiency. Workday boasts a 75.6% gross margin and 16.8% revenue growth over the past year, yet upcoming changes in its go-to-market strategy have introduced uncertainty. With its Q4 FY2025 earnings report due in four days, analysts at Oppenheimer do not anticipate major changes to growth guidance, nor do they expect generative AI to significantly impact the business in the near term.

Despite this, analysts believe Workday’s operating margin and cash flow outlook will improve post-earnings as the company refines its operating model. The stock appears undervalued relative to historical cash multiples, reinforcing Oppenheimer’s bullish stance.

In related news, Workday recently announced an 8.5% workforce reduction to enhance profitability, targeting a 15% revenue growth rate and an estimated 320-basis-point improvement in non-GAAP operating margin. This move has drawn mixed reactions from analysts:

• Needham: Reiterates a Buy rating with a $300 price target, seeing the restructuring as a long-term positive.
• Morgan Stanley: Downgrades Workday from Overweight to Equalweight, cutting the price target from $330 to $275 due to growth concerns.
• Evercore ISI: Maintains Outperform with a $310 target, expecting Q4 results to align with prior guidance.
• Canaccord Genuity: Keeps a Buy rating with a $300 target, citing strong subscription revenue growth.

Although the workforce reduction has sparked concerns, analysts generally view it as a strategic decision to boost margins. Workday’s guidance suggests Q4 revenue will at least meet expectations, offering some reassurance to investors.

This Analyst Is No Longer Bullish on Workday: Here Are Wednesday’s Top 5 Downgrades

Workday Inc. (NASDAQ: WDAY) saw a downgrade on Wednesday, joining a list of five notable stocks that analysts have revised their outlook on. Here’s a breakdown of the key downgrades:

• Qiagen NV (QGEN) – Stock trading at $39.57 (+2.59%)
• Supernus Pharmaceuticals Inc. (SUPN) – Stock trading at $32.63 (-5.67%)
• Tactile Systems Technology Inc. (TCMD) – Stock trading at $14.95 (-2.80%)
• Bio-Techne Corp. (TECH) – Stock trading at $64.80 (-1.05%)
• Workday Inc. (WDAY) – Stock trading at $257.25 (-1.67%)

What This Means for Investors

• How will Qiagen’s downgrade impact the biotech sector?
• Should investors be cautious about Bio-Techne’s stock movement?
• What does Workday’s downgrade signal for SaaS companies?
• Could Tactile Systems face increased competition?
• What are the implications for Supernus Pharmaceuticals investors?
• Which sectors might react strongly to these analyst downgrades?
• How do downgrades influence long-term investment strategies?
• Could any of these stocks rebound in the future?

For real-time updates and in-depth market insights, Benzinga offers premium content, including expert analysis, emerging stock trends, and earnings alerts to help investors make informed decisions.

Workday Receives Cautious Hold Rating Amid Growth Uncertainty and Valuation Concerns

In a recent report, Citi analyst Steve Enders reaffirmed a Hold rating on Workday (NASDAQ: WDAY) with a price target of $270.00.

Key Factors Behind the Hold Rating

• Uncertain Growth Outlook: Workday’s FY26 growth projections remain unclear, especially following its recent workforce reduction (RIF). Analysts are concerned that the initial guidance may not fully account for potential risks.
• Mixed Performance in HR Software: While Workday continues to show strength in the Fortune 500 Human Capital Management sector, its small and mid-market HR software segments face challenges due to lower employee volumes affecting sales momentum.
• Valuation Considerations: The company is currently trading at 20 times its expected free cash flow for 2026, positioning it below industry peers. Despite this, analysts remain cautious until further clarity emerges on growth prospects and margin improvements.
• Market Penetration Questions: Workday’s expansion into the financial services sector and adoption rates in the mid-market segment remain areas of concern.

Given these factors, Citi maintains a neutral stance, awaiting clearer signs of stabilization or a significant shift in profitability before reconsidering its rating.

In a separate report from February 20, Guggenheim also reaffirmed a Hold rating but did not provide a price target.

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