Workday stock rating reiterated as Neutral by Guggenheim ahead of earnings

Investing.com - Guggenheim has reiterated its Neutral rating on Workday (NASDAQ:WDAY) ahead of the company’s upcoming earnings report scheduled for August 21. The company, currently valued at $59.2 billion, maintains strong financial health with a "GOOD" rating according to InvestingPro analysis, holding more cash than debt on its balance sheet.

The research firm noted that Workday continues to operate in what it describes as a "challenging new business environment" or a "new normal," where large transformational Human Capital Management (HCM) projects have become less of a priority for IT spending.

Despite these headwinds, Guggenheim believes Workday is better positioned now than a few years ago, citing management’s steps to diversify business generation through channel partners, payroll partnerships, and down-market expansion.

Partner checks revealed mixed results this quarter, with growth in areas like Financials, International expansion, and add-on sales being partially overshadowed by the apparent slowdown in large HCM projects and stalled SAP ECC migrations due to macroeconomic uncertainty.

While Guggenheim believes Workday can deliver on its fiscal year 2026 Subscription revenue guidance of 14% growth, the firm suggests achieving this organically looks increasingly challenging, potentially requiring revenue-generating acquisitions, noting that the recently announced Flowise acquisition "doesn’t seem to be directly revenue-generative."

In other recent news, Workday has reported several significant developments. Evercore ISI has reiterated its Outperform rating for Workday, maintaining a price target of $275, with expectations of a slight beat in subscription revenue guidance of $2.16 billion. This follows Workday’s acquisition of Flowise, a low-code platform designed to enhance AI agent building capabilities for human resources and finance functions. Meanwhile, UBS has adjusted its price target for Workday to $250, citing concerns over softening demand in the human capital management sector, while maintaining a Neutral rating. Additionally, Piper Sandler has downgraded Workday from Neutral to Underweight, lowering its price target to $235 due to concerns over AI-driven headcount reductions. Workday is also gearing up for its annual Workday Rising conference, featuring notable speakers such as Brené Brown and representatives from Microsoft and Instacart. These developments highlight a dynamic period for Workday as it navigates both opportunities and challenges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.