In a report released yesterday, Steve Enders from Citi maintained a Hold rating on Workday (WDAY – Research Report), with a price target of $270.00.
Steve Enders has given his Hold rating due to a combination of factors affecting Workday’s current and future performance. One key reason is the uncertainty surrounding Workday’s growth projections for FY26, particularly after a recent reduction in workforce (RIF) and concerns that the initial guidance might not be fully de-risked. This uncertainty is compounded by mixed results from the small and mid-market HR software segments, where sales momentum is countered by challenges from lower employee volumes.
Moreover, Workday’s valuation at 20 times the expected free cash flow for 2026 suggests that the company is currently trading at a discount compared to its peers in the software industry. While there are signs of stabilization in demand and continued leadership in the Fortune 500 Human Capital Management space, questions remain about the company’s financial services penetration and mid-market adoption. The Hold rating reflects a cautious stance until there is more clarity on the growth trajectory or a significant shift towards improving margins.
In another report released on February 20, Guggenheim also maintained a Hold rating on the stock with a $0.00 price target.