Rosenblatt has trimmed its price target on Workday Inc (NASDAQ:WDAY) to $150 from its prior level, while leaving the firm’s rating at Buy, after the enterprise software provider reported fourth-quarter results and issued fiscal-year guidance that disappointed the market.
Workday’s fourth-quarter results aligned with expectations, but management disclosed booking weakness driven by deals that slipped. The company’s guidance for the new fiscal year fell short of market forecasts on both top-line revenue and profit, prompting Rosenblatt to reassess its near-term valuation assumptions for the stock.
The shares currently trade at $130.23, close to their 52-week low of $125.83. Over the past week the stock has declined 8.7 percent, and it has fallen 41.7 percent over the last six months. Despite the pullback, InvestingPro analysis included with the coverage suggests the stock is undervalued at present levels, implying potential upside for investors prepared to wait through the near-term uncertainty. Workday’s gross profit margin remains robust at 75.7 percent, a margin structure Rosenblatt noted as a favorable attribute in the face of transient headwinds.
Rosenblatt’s updated view trims the company’s growth outlook primarily by forecasting slower growth rates in the second half of the fiscal year and expecting a more gradual pace of margin expansion. The firm did not, however, modify Workday’s fiscal 2028 growth and margin framework, leaving the longer-term targets intact despite the reduced near-term guidance.
In its assessment, Rosenblatt characterized the lower revenue guidance as consistent with the explanations provided by company management. The firm emphasized its preference for businesses that sustain high gross margins while continuing to invest, but it noted that the combination of factors at Workday is difficult to reconcile without either increased near-term conservatism or a scenario in which the company’s flex credits model accelerates rapidly toward the end of the fiscal year.
Given the uncertainty, Rosenblatt opted to lower its price target until it sees clearer evidence that upside is materializing for the business software provider. The firm indicated it will await stronger signs in bookings or margin momentum before moving the target higher.
Analyst reactions across the sell-side have shifted in recent days, reflecting concern about Workday’s growth trajectory and leadership developments. TD Cowen downgraded its rating on Workday to Hold from Buy, citing fourth-quarter deal slippage and reducing its growth forecast. Wolfe Research pared its price target while maintaining an Outperform rating, pointing to slowing growth in core business areas and longer sales cycles, notably among private equity-backed customers. Evercore ISI moved its rating to In Line from Outperform and flagged the company’s CEO transition and investments in AI as contributors to a lower fiscal 2027 revenue guide. Citizens lowered its view to Market Perform following the announcement that founder Aneel Bhusri returned to the CEO role.
In summary, the market reaction and analyst adjustments underline investor focus on bookings, the cadence of margin recovery, and clarity around leadership and strategic initiatives. While some firms have softened their near-term outlooks and price targets, Rosenblatt and other analysts continue to monitor whether Workday’s longer-term framework remains achievable under the altered short-term dynamics.
Summary
Rosenblatt lowered Workday’s price target to $150 but kept a Buy rating after Q4 results that met expectations and guidance that came in below forecasts. Weak bookings and slipped deals drove concerns, and multiple analysts adjusted ratings and targets as they reassessed growth and margin prospects. The stock trades near its 52-week low, although a high gross margin and InvestingPro’s valuation view suggest potential upside for investors willing to tolerate short-term risk.
Key points
- Rosenblatt reduced its price target to $150 while maintaining a Buy rating following Workday’s Q4 and fiscal-year guidance.
- Q4 results met expectations but bookings were weak due to slipped deals, and fiscal-year guidance fell short on revenue and profit.
- The stock trades near its 52-week low, and several sell-side firms have downgraded or lowered targets amid concerns over growth, sales cycles, and leadership changes; sectors impacted include enterprise software and broader technology and cloud services.
Risks and uncertainties
- Slipped deals and weak bookings could continue to pressure revenue growth and investor sentiment - relevant to enterprise software vendors and cloud services providers.
- Extended sales cycles, particularly in segments such as private equity-backed customers, may delay expected revenue recognition and margin expansion.
- Leadership transitions and strategic investments, including spending on AI initiatives, are cited as factors contributing to revised revenue guidance and could increase execution risk.