KeyBanc reduces price target, maintains Overweight
KeyBanc has lowered its price target on Workday (NASDAQ:WDAY) to $155 from $260 but kept an Overweight rating on the shares. The firm said it was disappointed by the companys fiscal 2027 guidance, which it judged to be weak on both revenue growth and margin expansion.
Guidance and management context
Analysts at KeyBanc noted that the tempered expectations align, at least in part, with the return of CEO Aneel Bhusri to the role. The firm suggested that investors who were prioritizing near-term margin gains will be frustrated by the outlook, although KeyBanc also observed there appears to be some conservatism embedded in the projections.
Workday has postponed any revisions to medium-term margin targets until its next Financial Analyst Day, leaving longer-term margin objectives unchanged for now. The company also remains exposed to uncertainties tied to artificial intelligence and to the effects of recent management changes.
Valuation and share performance
Following the guidance-related pullback in the stock, KeyBanc calculates that Workday is trading at roughly 8 times fiscal 2028 enterprise value to free cash flow and about 2 times fiscal 2028 enterprise value to sales. The shares were trading at $130.23, close to a 52-week low of $125.83, and have fallen nearly 49% over the past year.
Separate analysis from InvestingPro places a Fair Value for Workday at $210.51, implying upside for longer-term, patient investors. According to that service, it also provides 15 additional exclusive tips and comprehensive metrics for WDAY, including Pro Research Reports available for over 1,400 US equities.
Recent operating and guidance results
Workdays fourth-quarter results met expectations, but managements guidance for the new fiscal year missed on both revenue and profit targets. That shortfall has prompted a series of analyst reactions and adjustments to price targets across the sell-side.
Analyst reactions across the street
- Bernstein SocGen cut its price target on Workday to $214 from $298 while keeping an Outperform rating, citing conservative fiscal 2027 guidance.
- Cantor Fitzgerald reiterated an Overweight rating with a $200 price target, citing a constructive view tied to expectations of a slow adoption curve for AI in large enterprises.
- BofA Securities left its Buy rating and $265 price target intact after the fourth-quarter results, noting cRPO growth of 15.8% that slightly exceeded guidance.
- Rosenblatt trimmed its price target to $150 but maintained a Buy rating, pointing to weak bookings and guidance that underwhelmed expectations.
- TD Cowen downgraded the stock to Hold from Buy and cut its price target to $155, referencing deal slippage and a reduced growth forecast.
What this means for investors
The mix of conservative guidance, executive change, and persistent uncertainty around AI adoption has left analysts split on Workdays near-term trajectory. Valuation metrics cited by KeyBanc suggest the market is pricing in slower growth, while some firms continue to see upside based on differing assumptions about bookings, recurring revenue momentum, and the pace at which enterprise customers adopt AI-driven capabilities.
Readers should note that the article does not add new company guidance or financial figures beyond those cited by the analysts and services referenced above.