Stifel has lowered its fair value estimate for Workday (NASDAQ: WDAY) to $175 from $235, while sustaining a Hold recommendation on the cloud enterprise software company. The move comes amid a turbulent stretch for the stock, which is down more than 24% so far this year and about 40% over the past 12 months. At current prices the shares are trading at a price-to-earnings ratio of 64.37 and sit close to their 52-week low, with technical indicators pointing toward oversold conditions.
The analyst adjustment followed Workday’s announcement that co-founder and executive chair Aneel Bhusri will reassume the role of CEO effective immediately, replacing Carl Eschenbach. Eschenbach will not leave the company entirely; the firm said he will transition to a strategic advisor position and continue to support Bhusri and the broader business.
Stifel characterized Eschenbach’s exit from the CEO role as unsurprising given the operational challenges the company has faced since he was elevated to co-CEO in December 2022. The firm noted Eschenbach had served on Workday’s board of directors beginning in 2018 before stepping into the co-CEO role. According to Stifel, the timing of the leadership change - announced separately from last week’s reduction in force - suggests the board only recently resolved to make the move, and that current operating outcomes may be falling short of internal expectations.
In its commentary, Stifel also flagged the possibility that Workday could set fiscal year 2027 guidance below consensus Street expectations. The firm singled out the company’s finance chief, expressing a desire that CFO Zane Rowe remain in place, citing his role in managing the company’s recent efficiency gains.
Other brokerages have delivered divergent messages to investors. Oppenheimer has retained an Outperform rating with a $270 price target, while Evercore ISI trimmed its target from $300 to $200 but maintained an Outperform rating, pointing to growth concerns characterized as a "leaky bucket" trajectory. These differing viewpoints leave investors weighing near-term execution risks against longer-term strategy, including a renewed emphasis by Workday on advancing its artificial intelligence strategy.
As the company begins fiscal 2027, market participants will be watching closely for clarity. The upcoming earnings call is expected to provide further color on financial results, cost efficiencies and the shape of guidance for the year ahead. Given the recent management change and the varied assessments from the sell-side, both operational performance and executive continuity - especially in finance and product strategy - will be focal points for investors and analysts.
Context for markets:
- Enterprise software and cloud services: investor attention on growth and margin trajectory.
- Technology sector: management stability and strategic clarity, including AI initiatives, are central to re-rating risk.
- Equity markets: valuation multiples and near-term guidance are key drivers of sentiment for software names.