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Investing.com - UBS lowered its price target on Workday (NASDAQ:WDAY) to $250 from $285 on Tuesday, while maintaining a Neutral rating on the human capital management software provider. Currently trading at $213.69, the stock has seen a 17% decline year-to-date, according to InvestingPro data, which also indicates the company is currently trading below its Fair Value.
The price target reduction comes ahead of Workday’s second-quarter earnings report scheduled for Thursday, August 21, with UBS citing feedback from industry partners that indicated softening demand. Despite market concerns, InvestingPro data shows the company maintains strong fundamentals with a healthy 76% gross margin and robust revenue growth of 15% over the last twelve months.
UBS analyst Karl Keirstead based the adjustment on conversations with four partners and one customer, noting a "slight tone downtick" compared to three months ago, with most partners falling short of their growth targets.
The feedback revealed growth rate pressures affecting Workday’s business, with more pronounced challenges in the company’s Human Capital Management (HCM) offerings than in its Financial Management solutions.
Workday stock has declined 18% since its first-quarter earnings release in April, and now trades at 16 times calendar year 2026 free cash flow, a valuation level UBS describes as "washed-out" but insufficient to warrant a rating change from Neutral.
In other recent news, Workday, Inc. announced the launch of its new Workday Agent Partner Network, in collaboration with major tech companies like Accenture (NYSE:ACN), Adobe (NASDAQ:ADBE), and Microsoft (NASDAQ:MSFT). This initiative, unveiled at the Workday DevCon 2025 event, aims to integrate AI agents across various systems to enhance workflow efficiency. Additionally, Workday introduced a suite of AI development tools designed to boost productivity for developers on its platform. These tools allow for seamless integration of third-party agents, offering a variety of options for customers. In terms of analyst activity, Piper Sandler downgraded Workday from Neutral to Underweight, citing concerns over potential AI-driven headcount reductions. Conversely, Oppenheimer reaffirmed an Outperform rating with a $300 price target, maintaining a positive outlook on Workday’s AI initiatives. Lastly, the company has scheduled its annual Workday Rising conference, featuring speakers like Brené Brown and representatives from Microsoft, to discuss enterprise transformations and AI advancements.
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