Evercore ISI Downgrades Workday (WDAY) to In Line

Evercore ISI analyst Kirk Materne downgraded Workday (NASDAQ: WDAY) from Outperform to In Line with a price target of $160.00 (from $200.00).

The analyst comments: "Workday delivered in-line F4Q results, but with a new CEO in place, an agentic strategy in the early innings, and a lowered FY27 revenue guide it’s hard to see how the investment narrative moves in a more positive direction in the immediate near-term. While Workday remains entrenched in the enterprise and no one is looking to vibe code away an HR system, the company’s agentic strategy is still in the early days and seeing will be believing in terms of adoption/consumption. We believe resetting the bar in terms of the FY27 revenue guide was a smart idea to go along with the CEO transition, but a higher level of AI investment also removes any real operating leverage upside in the near-term and makes the prior FY28 op. margin guide (~35%) seem unlikely. The pushout of some larger deals in Fed/SLED and in the commercial market also opens up a question about the macro backdrop – though it seems like most of these deals are still in the pipeline. While shares are seemingly washed out at these levels, at ~20x GAAP EPS, we believe many value investors are likely to remain on the sidelines until some of the organic investments start to result in upside to expectations – both in terms of revenue and op. margins. All in – the stock reaction seems a bit heavy given that expectations were already low coming away from the 8K earlier this month, but with our FCF estimates coming down and no near-term catalysts on the agentic front, we are moving to the sidelines."

For an analyst ratings summary and ratings history on Workday click here. For more ratings news on Workday click here.

Shares of Workday closed at $130.23 yesterday.

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