Workday (WDAY) Stock Forecast & Price Target

Workday has demonstrated robust growth in its subscription revenue, with a year-over-year increase of 14.5%, indicating strong demand for its cloud-based solutions despite a slight decline in professional services revenue. The company has significantly improved its financial metrics over the years, with total revenue projected to rise from $1.57 billion to $8.45 billion under ASC 606, alongside a marked increase in free cash flow from $228 million to $2.19 billion and an improvement in operating margin from 14% to 26%. Furthermore, with raised operating cash flow guidance to $2.9 billion and ongoing stock repurchase initiatives totaling $3.6 billion by the end of FY27, Workday is positioned for steady near-term growth and potential acceleration as IT spending rebounds.

Workday has experienced a material slowdown in growth, raising concerns about its future performance and margin stability, particularly as the company faces potential disruptions from generative AI. The financial outlook for FY27 indicates achievable subscription revenue guidance, but this is predicated on a decline in new annual contract value, suggesting underlying weaknesses in securing new business. Additional downside risks include poor performance in large enterprise deals, limited traction in international markets, and overall underperformance, which could negatively impact future revenue and earnings per share.