Morgan Stanley says that with Workday (WDAY) investors already concerned about slowing growth and the management team’s multiple cuts to growth expectations over the past couple of years, today’s announcement of an 8.5% headcount reduction has the risk of further exacerbating those concerns. Investors may find it hard to imagine Workday would be making this meaningful of a headcount reduction from a position of strength from a demand perspective. That being said, the announcement did mention Workday expects Q4 results to be in-line with or above guidance, a positive signal on there being upside to current growth estimates/guidance, Morgan Stanley adds. More constructively, the announcement reads strongly as a positive signal for margins, the firm argues. Morgan Stanley has an Overweight rating on the shares with a price target of $330.
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