Workday Inc Sees Price Target Increase After Strong Q2 Results: KeyBanc Boosts Target to $305.00
Workday Inc. (NASDAQ: NASDAQ:) experienced a surge in its price target from KeyBanc, climbing from $275.00 to $305.00. The firm has upheld an Overweight rating on the stock as well.
The increase came on the heels of Workday's robust second-quarter results, which showcased a 16.1% growth in 12-month calculated remaining performance obligation (cRPO), surpassing expectations.
Despite the strong performance, the company's guidance for third-quarter cRPO growth fell slightly below market projections due to ongoing deal scrutiny and moderation in headcount.
Workday also shared an update on its medium-term (MT) targets, projecting a 15% annual subscription revenue growth for fiscal years 2026 and 2027. Additionally, the company anticipates its operating margin (OM) to expand to 30% by fiscal year 2027, up from the previously estimated 25%.
KeyBanc's analyst expressed optimism about the early announcement of updated growth versus margin framework, predicting a positive reception from investors.
Following recent developments, both Needham & Company and Piper Sandler maintained their bullish ratings on Workday's shares. Needham kept a Buy rating with a price target of $350, while Piper Sandler raised the price target to $285 from $262.
Workday's strategic shift towards profitability, with a focus on non-GAAP operating margins of 30% by fiscal year 2027, reflects the company's response to market dynamics and growth expectations.
InvestingPro Insights
Workday Inc. (NASDAQ:WDAY) showcases a strong financial position, with a market capitalization of around $67.76 billion and a P/E ratio of 43.73. The company's robust gross profit margin of nearly 75.77% underscores its operational efficiency and cost management.
InvestingPro Tips highlight Workday's solid balance sheet, emphasizing its financial stability and growth potential. The company's low price volatility makes it an attractive option for investors seeking stability in the tech sector.
Valuation multiples suggest investor confidence in Workday's future earnings potential, aligning with analyst expectations of profitability in the near future. InvestingPro offers in-depth analysis for investors interested in exploring Workday's financials and market performance.
Overall, Workday's recent developments and financial outlook position it as a promising investment opportunity in the software industry.