Oppenheimer has left its rating on Workday (NASDAQ:WDAY) unchanged at Outperform and reaffirmed a $270.00 price objective in the wake of an abrupt change in the company’s leadership. The firm noted that the price target implies roughly a 75% upside from the stock’s current quoted price of $153.78, while InvestingPro data shows the shares trading close to a 52-week low of $156.87.
On Monday, Workday announced that Carl Eschenbach stepped down as chief executive, effective immediately, and that co-founder Aneel Bhusri is resuming the CEO role. Oppenheimer characterized the transition as occurring at a "critical point" for the business, citing relative shortfalls versus peers in areas including revenue growth, stock performance, and development of AI-related products over recent years.
The company’s share price has fallen 40% over the past year and 27% in the last six months, even as revenue grew 13% in the most recent twelve-month period. These mixed signals - ongoing top-line growth alongside significant market underperformance - framed Oppenheimer’s assessment of the leadership change.
In commentary accompanying the rating decision, Oppenheimer analyst Ken Wong said Bhusri brings "a unique mix of deep enterprise technology development, knowledge of the company’s evolution, large customer and partner relationships, and operational experience" to the role. The firm also acknowledged that the change in chief executive introduces short-term uncertainty and the potential for shifts in corporate strategy, but stated that Bhusri appears to be "the right person to lead Workday through the software industry transition to AI technologies."
InvestingPro data cited by Oppenheimer shows that Workday’s balance sheet currently features more cash than debt and a current ratio of 1.83, indicating liquid resources on hand. The platform also lists a detailed Pro Research Report on Workday among its more than 1,400 US equities covered in-depth.
Other recent developments at Workday include preparations for an upcoming earnings call and an independent reassessment of price targets by other brokerages. Evercore ISI lowered its price target for the company to $200 from $300, citing concerns about Workday’s growth trajectory, while maintaining an Outperform rating.
The executive change coincides with steps to reorganize parts of the workforce. Workday plans to eliminate roughly 400 positions, representing about 2% of its overall headcount, with the reductions concentrated in non-revenue generating roles within the Global Customer Operations organization. Management expects the restructuring to result in charges of approximately $135 million in the fiscal fourth quarter. Carl Eschenbach will transition to a strategic advisor role under the new arrangement.
Oppenheimer’s maintained rating and elevated price target reflect the firm’s view that leadership experienced with the company’s history and enterprise relationships may be positioned to guide Workday through competitive pressures and the industry’s shift toward AI-enabled software. At the same time, the firm highlighted the tangible uncertainties that accompany a sudden chief executive change and operational restructuring.
Summary
Oppenheimer kept an Outperform rating and a $270 price target on Workday after Carl Eschenbach stepped down as CEO and co-founder Aneel Bhusri returned to lead the company. The firm framed the change as occurring at a "critical point," pointing to lagging revenue growth, stock performance, and AI product development versus peers. Workday announced roughly 400 job cuts and expects about $135 million in restructuring charges in the fiscal fourth quarter, while InvestingPro data shows a solid liquidity position with a current ratio of 1.83.
Key points
- Oppenheimer maintained an Outperform rating and a $270 price target on Workday, implying a 75% upside from the current price of $153.78.
- The company returned co-founder Aneel Bhusri to the CEO role after Carl Eschenbach stepped down; Eschenbach will serve as a strategic advisor.
- Workday plans to cut about 400 jobs (roughly 2% of staff), largely in Global Customer Operations, and expects approximately $135 million in related charges in the fiscal fourth quarter.
Risks and uncertainties
- Leadership transition risk - sudden CEO change could introduce strategic shifts or execution uncertainty for the software sector and enterprise technology customers.
- Operational restructuring - charges of approximately $135 million and workforce reductions may affect near-term results and customer support operations in Global Customer Operations.
- Growth trajectory concerns - recent broker revisions, including Evercore ISI lowering its price target, reflect questions about the company’s growth relative to peers in the enterprise software market.