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On Monday, Jefferies sustained its Buy rating and $325.00 price target on Workday stock (NASDAQ:WDAY), expressing confidence in the company’s ability to achieve or surpass its projected 15.1% cRPO (calculated remaining performance obligation) growth for the first quarter. The company, currently valued at $73 billion, has demonstrated strong revenue growth of 16.35% over the last twelve months, according to InvestingPro data. The firm’s analysis indicated that while the first quarter is expected to align with predictions, there is a note of caution from partners regarding the second half of the year, as deal closures may be delayed due to macroeconomic uncertainties.
Despite these concerns, Jefferies predicts that Workday’s recurring revenue model and continued investments from partners will likely result in minimal adjustments to the fiscal year 2026 estimates. The firm’s stance is supported by Workday’s current trading price, which is approximately 23 times its calendar year 2026 free cash flow. This valuation represents a roughly 20% discount compared to its peers when considering growth potential and margin expansion. InvestingPro analysis reveals the company maintains strong financial health with more cash than debt and liquid assets exceeding short-term obligations. Subscribers can access 12 additional ProTips and comprehensive valuation metrics.
Workday, known for its enterprise cloud applications for finance and human resources, has built a reputation for providing software solutions that customers tend to stick with over time, which contributes to the company’s stable financial outlook.
The analyst from Jefferies highlighted, "Our checks suggest an in-line F1Q, supporting our view that WDAY can meet or exceed 15.1% cRPO growth. That said, partners are more cautious on 2H as deals take longer to close amid macro uncertainty. Given WDAY’s sticky software and partner investments, we expect limited changes to FY26 estimates. Near-term trading aside, WDAY trades at ~23x CY26 FCF—a ~20% discount to peers on comparable growth and margin upside. Maintain Buy."
Investors and market watchers will be keeping an eye on Workday’s performance as the year progresses, particularly focusing on the company’s ability to navigate the challenges posed by the broader economic environment while maintaining its growth trajectory. With analyst price targets ranging from $230 to $348 and the company’s impressive gross profit margin of 75.5%, detailed analysis and future growth projections are available in the comprehensive Pro Research Report, part of the InvestingPro subscription.
In other recent news, Workday Inc . has reported several significant developments that are catching the attention of investors. S&P Global Ratings upgraded Workday to ’BBB+’ from ’BBB’, citing the company’s stronger cash position and business resilience. This upgrade is supported by Workday’s increased free operating cash flow and a record high net cash position of approximately $5 billion. Additionally, Workday has launched new AI-powered contract management tools, enhancing its platform’s capability to extract actionable insights from complex contracts, which could streamline business processes and reduce risks.
Analyst firms have also weighed in on Workday’s prospects. BMO Capital Markets maintained its Outperform rating with a $314 price target, emphasizing Workday’s strategic investments in go-to-market strategies and AI. KeyBanc Capital Markets reaffirmed an Overweight rating with a $335 price target, highlighting Workday’s strategic positioning and growth potential. Meanwhile, Needham reiterated a Buy rating with a $300 price target, noting improvements in Workday’s Student system and integration capabilities.
Workday’s financial performance has been noteworthy, with a nearly doubled revenue base and more than doubled annual EBITDA and free operating cash flow over the past four years. The company maintains a 98% gross revenue retention rate, reflecting the mission-critical nature of its solutions. These recent developments suggest that Workday is well-positioned for continued growth and financial stability despite macroeconomic uncertainties.
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