Update shared on27 Aug 2025
Fair value Decreased 4.45%Workday’s consensus price target has been revised downward to $280.19 as analysts cite tepid organic growth, mixed quarter indicators, increasing competition, and persistent sector headwinds, despite continued profitability improvements.
Analyst Commentary
- Q2 results generally exceeded expectations on revenue and margin, but organic growth guidance was maintained, with revenue outlook lifts mainly attributed to the Paradox acquisition rather than core business acceleration.
- Analysts are cautious due to mixed quarter indicators, including a billings miss, tepid top-line beats, uncertainty in the second-half outlook, and a lack of clear signs of inflection in underlying business momentum.
- Competitive pressures are highlighted, with accelerating momentum observed at Microsoft D365 and Oracle NetSuite/Fusion, raising concerns over Workday’s relative growth and market share.
- Broader sector dynamics and customer sentiment reflect ongoing headwinds: skepticism persists over undemanding valuation multiples, artificial intelligence uncertainty, and potential AI-driven risks to application spend and per-employee pricing models.
- Despite short-term growth uncertainty and sector-wide "hangover," bullish analysts see reasonable long-term risk-reward, stabilizing industry estimates, and Workday’s continued focus on profitability as supporting the stock’s defensive qualities.
What's in the News
- Workday announced multiple strategic partnerships to strengthen its Wellness and HCM offerings, including collaborations with Chime (financial wellness), New York Life Group Benefit Solutions (AI-driven benefits insights), DailyPay (on-demand pay), Payactiv (earned wage access), Simpplr (intranet and employee engagement integration), and Unimarket (higher education procurement integration).
- Raised FY26 subscription revenue guidance to $8.815 billion (14.2% growth, reflecting acquisition of Paradox), and provided Q3 guidance for $2.235 billion in subscription revenues (14.1% growth).
- Completed repurchase of 1.2 million shares ($299 million) in latest tranche, totalling 3.29 million shares ($792.21 million) under the August 2024 buyback; no shares repurchased under the May 2025 buyback.
- Introduced new AI developer toolset (Workday Illuminate), Agent Gateway, AI Widgets, and Agent Partner Network, enabling third-party AI agent integration and launching multiple AI-powered agents and services on Workday Marketplace; partners include Accenture, Adobe, AWS, Deloitte, Google Cloud, IBM, KPMG, Microsoft, and others.
- Seattle University selected multiple Workday cloud solutions (HCM, Financial Management, Student), aiming to unify operational data, streamline processes, and enhance student and campus experiences.
Valuation Changes
Summary of Valuation Changes for Workday
- The Consensus Analyst Price Target has fallen slightly from $293.23 to $280.19.
- The Future P/E for Workday has significantly fallen from 58.20x to 49.31x.
- The Net Profit Margin for Workday has risen from 14.00% to 15.35%.
Disclaimer
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