Update shared on23 Sep 2025
Fair value Increased 1.07%Workday’s consensus price target rose modestly to $282.05 as analysts cited AI-driven product advancements, improving margins, and accretive acquisitions, but tempered optimism given competitive pressures, macro headwinds, and cautious guidance amid mixed business momentum.
Analyst Commentary
- Bullish analysts highlighted new AI and Agentic AI initiatives, product updates, and acquisitions such as Sana and Paradox, which position Workday to benefit from enterprise adoption and improved platform capabilities.
- Improved profitability and margin expansion were frequently cited, with some analysts more positive on Workday's ability to deliver higher margins even as growth targets are made slightly more conservative.
- Several analysts flagged ongoing macro headwinds and competitive pressure from Microsoft and Oracle, contributing to more cautious growth guidance and reflecting in lowered near- and medium-term price targets.
- Despite recent revenue beats, underlying business momentum appears mixed, with muted guidance raises stemming from inorganic factors rather than strong organic growth, and persistent questions about a visible inflection in subscriber growth.
- Bearish analysts remain concerned about risks from evolving AI pricing models, eroding customer appetite for broader application spend, and the potential for AI-driven reductions in end-user headcount pressuring future growth rates.
What's in the News
- Workday announced a $4 billion Class A share repurchase program with no expiration date, following Board authorization.
- Expanded AI and product offerings including the launch of Workday Build (developer platform with new low-code Flowise Agent Builder), Workday Data Cloud (secure integration of HR/finance data), and Illuminate agents for HR, Finance, and Industry; introduced Workday Flex Credits for flexible AI consumption.
- Deepened AI ecosystem and client integrations via major collaborations (Microsoft for agent management and security, over 15 Workday Ventures partners joining Agent Partner Network, new partnerships with Databricks, Salesforce, Snowflake, and Kinaxis for cross-functional planning).
- Multiple client and partner wins in HR transformation, benefits, and payroll (including DailyPay, Payactiv, Chime, Benepass, New York Life GBS, Spring Health, EZE Cloud Consulting for MoneyHero, TeamBuilder, Zuora, Simpplr, Unimarket, and Seattle University), expanding Workday’s enterprise and marketplace reach.
- Raised subscription revenue guidance to $8.815 billion for FY2026 (+14.2%), with Q3 guidance at $2.235 billion (+14.1%); ongoing M&A appetite highlighted, focused on strategic/tuck-in deals.
Valuation Changes
Summary of Valuation Changes for Workday
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $279.05 to $282.05.
- The Net Profit Margin for Workday has significantly risen from 14.27% to 16.70%.
- The Future P/E for Workday has significantly fallen from 52.89x to 45.59x.
Disclaimer
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