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Workday said it now expects 17%-19% Subscription Revenue growth through FY27, which analysts highlight is below the consensus of 20.6% growth.
Analysts at BofA Securities, Wolfe Research, Citi, and Barclays have already come out with lower price targets following the weaker guidance.
BofA analysts lowered their price target to $260 from $275, while maintaining a Buy rating. While noting the lower guidance, the analysts also said that given the tough macro environment, “a healthy degree of conservatism is built into the expectation.” The firm lowered FY25-26E revenue estimates to $8.48 billion and $9.94 billion from $8.53B and $10.12B and FCF estimates to $2.03B and $2.41B from $2.13B and $2.75B, respectively.
Citi analysts cut their price target to $236 from $247, while maintaining a Neutral rating. “While the outlook is disappointing, we expect a portion is driven by macro and conservatism of a new team resetting expectations,” the analysts commented. “Mgmt gave a well-received 12mo cRPO metric ($5.9B, +21% y/y in F2Q, +1pt from early renewals) that should help give some confidence ahead of the next FY guide. We remain Neutral rated as we see promise in growth initiatives driven by a strong exec lineup, yet a still challenging deal env and risk-reward balanced with WDAY trading at 26x CY24 EV/FCF.”
Elsewhere, Wolfe Research lowered the price target on Workday to $255 from $275, while maintaining an Outperform rating, and Barclays lowered its price target to $249 from $262, while maintaining an Overweight rating.
