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Investing.com - Evercore ISI has maintained its Outperform rating and $275.00 price target on Workday (NASDAQ:WDAY), a prominent player in the Software industry with a market capitalization of $59.2 billion, ahead of its earnings report due in 6 days. According to InvestingPro data, the company has demonstrated strong financial health with a robust current ratio of 2.07 and maintains more cash than debt on its balance sheet.
The research firm expects Workday to deliver a "small beat" against the subscription revenue guidance of $2.16 billion, representing 13.5% growth, though it anticipates no major changes to the company’s fiscal year 2026 subscription revenue growth forecast of approximately 14%. This aligns with Workday’s historical performance, as InvestingPro data shows the company has maintained a strong 18% revenue CAGR over the past five years, with current revenue growth at 15%.
Evercore ISI notes that a beat of around 50 basis points would align with Workday’s average performance over the past 13 quarters, and suggests the current second-quarter guidance essentially indicates a continuation of first-quarter trends when adjusted for the leap day impact.
For current remaining performance obligation (CRPO), the firm believes a growth rate close to 16%, compared to guidance of 15%-16%, would be "good enough" to satisfy investors, with a base case assumption of approximately 15.5% for the third quarter.
Evercore ISI concludes that the key takeaway from Workday’s upcoming quarter will likely be the company’s ability to execute in a challenging macroeconomic environment, while noting that debates about "terminal risk" are unlikely to be resolved in the near term regardless of quarterly results.
In other recent news, Workday, Inc. has acquired Flowise, a low-code platform for building AI agents, to enhance capabilities in human resources and finance functions. This acquisition aims to provide Workday customers and partners with tools for developing AI agents with increased speed and flexibility. Ahead of Workday’s upcoming second-quarter earnings report, UBS has lowered its price target for the company to $250 from $285, citing concerns over softening demand in the human capital management sector. Piper Sandler has also downgraded Workday from Neutral to Underweight, expressing concerns about potential AI-driven headcount reductions affecting the company’s business model. Meanwhile, Oppenheimer has reaffirmed its Outperform rating with a $300 price target, maintaining a positive outlook on Workday’s AI initiatives. Additionally, Workday’s annual conference, Workday Rising, is set to feature notable speakers such as Brené Brown and representatives from Microsoft and Instacart, discussing enterprise transformations and AI platform usage. These developments highlight a mix of strategic initiatives and varying analyst perspectives surrounding Workday.
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