Workday (WDAY) Stock Forecast & Price Target

Workday is well-positioned in the market as a leading cloud ERP provider, with a TAM of +$160B and only 25% penetration in the Global 2000 customer base, presenting a significant opportunity for growth. The company has a track record of strong financial performance with subscription revenue growing at an average of 15% and non-GAAP operating income margins at 30%, and it continues to invest in areas like AI to drive future growth. However, potential risks to its outlook include competition from legacy and agentic providers and budget consolidation in an increasingly challenging macroeconomic environment. Overall, with a bullish outlook towards its ability to capture incremental market share and grow its customer base, we rate Workday's stock as BUY with a 12-month price target of $150.

Workday is facing challenges in its bookings and revenue growth, as management cited longer sales cycles and deal push-outs. The lowered FY27 guidance reflects the returning CEO's focus on accelerating growth through investments in AI, but this also raises questions about the company's new MT target framework and adds execution risk. With a lowered price target of $135 based on reduced estimates and peer multiple compression, the current risk-reward for the stock looks balanced.