Workday stock price target lowered to $240 by UBS on growth concerns

Investing.com - UBS lowered its price target on Workday (NASDAQ:WDAY) to $240 from $250 while maintaining a Neutral rating on the stock. The new target still suggests potential upside from Workday’s current price of $215.01, with the stock trading near its 52-week low of $205.33, according to InvestingPro data.

The price target reduction follows Workday’s decision to reaffirm but not raise its USD-based fiscal year 2026 revenue guidance of $8.8 billion, excluding acquisitions, for the third consecutive quarter. This guidance aligns with Workday’s recent revenue growth of 13.94% over the last twelve months.

UBS noted that Workday’s second and third quarter guidance increases for fiscal year 2026 were largely attributed to the inclusion of the Paradox and Sana acquisitions rather than organic growth.

While UBS acknowledged that Workday’s approximately 14% growth rate remains solid for a company with $9-10 billion in revenue scale and exceeds many other large-cap SaaS firms, the firm highlighted concerns that Workday’s current remaining performance obligations (cRPO) to revenue growth rate continues to show modest deceleration despite the lift from AI SKUs.

UBS maintained its Neutral rating on Workday, citing a valuation of 17 times calendar year 2026 estimated free cash flow. InvestingPro data shows Workday currently trades at a P/E ratio of 108.85 with a free cash flow yield of 4%, suggesting the stock may be undervalued compared to its Fair Value. Discover Workday’s comprehensive Pro Research Report, available for subscribers among 1,400+ top US equities on InvestingPro.

In other recent news, Workday’s third-quarter fiscal 2026 results have garnered attention, with the company delivering better-than-expected performance across key metrics. Total revenue, operating margin, and earnings per share all exceeded consensus estimates, and subscription revenue surpassed expectations by $9 million. Various financial firms have adjusted their price targets for Workday, reflecting differing perspectives on its financial outlook. Morgan Stanley raised its price target to $280, citing an updated assessment of Workday’s strategic positioning. Meanwhile, TD Cowen lowered its target to $280, noting Workday’s balanced quarter amidst challenges in the Higher Education sector. Cantor Fitzgerald reiterated an Overweight rating with a $280 target, praising the company’s performance. RBC Capital reduced its price target to $320, describing the results as "solid," while Stifel lowered its target to $235, pointing to growth concerns and modest topline performance. These developments highlight the varied analyst opinions on Workday’s future prospects.

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