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Investing.com - Goldman Sachs has reduced its price target on Workday (NASDAQ:WDAY) to $280 from $300 while maintaining a Buy rating on the enterprise software company. According to InvestingPro data, Workday currently trades at a P/E ratio of 123.8, with analyst targets ranging from $230 to $340. The company’s market capitalization stands at $60.76 billion, reflecting its position as a prominent player in the software industry.
The adjustment follows Workday’s second-quarter results, which showed subscription revenue growth of 14.0%, operating margins of 29%, and current remaining performance obligations (cRPO) growth of 16.4%. Despite these figures, Workday shares fell 4% in after-hours trading as investors reacted to implied lower guidance for the second half of fiscal 2026. InvestingPro analysis shows the company maintains strong financial health with a GOOD overall score, supported by a current ratio of 2.1 and more cash than debt on its balance sheet.
Goldman Sachs cited strong artificial intelligence momentum as a positive factor, noting that more than 75% of Workday’s net new deals included at least one AI product, with AI new net annual contract value more than doubling year-over-year. The company’s expanding partner network also contributed to growth, driving over 20% of new net annual contract value for the second consecutive quarter.
The firm highlighted Workday’s margin performance as another strength, with the company raising its fiscal year 2026 operating margin guidance by 50 basis points and free cash flow margin by 150 basis points, demonstrating its ability to drive profitability at scale while investing in product development.
Goldman Sachs expressed continued confidence in Workday’s long-term growth potential ahead of the company’s financial analyst day in September, maintaining that Workday represents a defensible business with multiple growth opportunities that could help it achieve $20 billion in revenue with 30-35% operating margins.
In other recent news, Workday reported its second-quarter earnings, surpassing expectations with non-GAAP earnings per share of $2.21, compared to the analyst consensus of $2.11. The company also exceeded revenue forecasts, bringing in $2.35 billion against an anticipated $2.34 billion. This marked a 13% year-over-year revenue growth, consistent with the previous quarter’s growth rate. Despite the positive earnings report, Workday’s stock faced a decline in after-hours trading.
BofA Securities responded to Workday’s second-quarter results by lowering its price target to $265 from $278, though it maintained a Buy rating, citing macroeconomic concerns. Meanwhile, JMP Securities reiterated its Market Outperform rating with a $315 price target, showing continued confidence in the company’s performance. These developments highlight the mixed sentiment among analysts regarding Workday’s future prospects.
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