Morgan Stanley analyst Keith Weiss maintained a Hold rating on Workday (WDAY – Research Report) yesterday and set a price target of $275.00.
Keith Weiss has given his Hold rating due to a combination of factors impacting Workday’s financial outlook. The company reported better-than-expected results for the fourth quarter, with current remaining performance obligations (cRPO) growth surpassing management’s guidance. Additionally, the guidance for the first quarter of the next fiscal year also exceeded consensus expectations, and the subscription revenue guidance for the fiscal year was slightly raised despite foreign exchange headwinds.
However, despite these positive indicators, Weiss notes that the company’s decision to reinvest savings from recent restructuring into sales capacity and AI product development may limit improvements in earnings per share (EPS) and free cash flow (FCF). While the operating margin exceeded estimates, the anticipated benefits from headcount reductions were not fully realized, as savings are being redirected into strategic investments. Consequently, while Workday’s performance is commendable, Weiss remains cautious about the company’s growth potential and sees more attractive opportunities in the software sector.
In another report released on February 23, Citi also maintained a Hold rating on the stock with a $270.00 price target.