On Wednesday, RBC Capital Markets sustained its optimistic stance on shares of Workday, Inc. (NASDAQ:WDAY), increasing its price target to $320 from the previous $300. The firm maintained an Outperform rating on the stock, signaling confidence in the company's prospects. According to InvestingPro data, Workday, with its $74 billion market cap, is currently trading near its Fair Value, while maintaining a "GREAT" financial health score.
The adjustment follows investor meetings in Toronto with Workday's VP of Investor Relations, Justin Furby. The discussions centered on several key aspects, including the rationale behind the revised target model, the current demand environment, core growth drivers, and the financial year 2026 guidance.
The company's strong fundamentals are evident in its impressive 16.8% revenue growth and robust liquidity position, with current assets more than twice its short-term obligations.
A significant point of interest during the meetings was the conservative nature of Workday's updated guidance and target model. It was noted that the original long-term targets were established by previous management, which had a different approach, particularly in regional leadership and investment focus. The past focus was more on product development rather than market expansion strategies.
The new management has shifted strategies by hiring FINS-specific sales personnel, initiating partner enablement programs for lead generation, and bringing in new senior and international leaders. These changes are part of a broader effort to reorient the company's go-to-market approach.
RBC Capital believes that despite the initial underwhelming reaction to Workday's new targets, the company's management has a clear vision for achieving these goals. With strong execution, Workday could potentially exceed expectations and deliver positive surprises to investors.
The stock has already shown strong momentum with a 34% gain over the past six months. For deeper insights into Workday's valuation and growth prospects, including 12 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, notable tech companies AppLovin (NASDAQ:APP) and The Trade Desk (NASDAQ:TTD) experienced stock declines following their exclusion from the latest S&P 500 Index rebalance. On the other hand, Apollo Global Management (NYSE:APO) and Workday saw their shares rally upon announcement of their inclusion in the index.
Workday's recent developments include a 16% increase in third-quarter subscription revenue and an adjusted fiscal year 2026 subscription growth forecast to a slightly lower 14%. Analyst firms TD Cowen and Oppenheimer maintained their positive ratings, while Goldman Sachs reduced its price target for Workday but sustained a Buy rating.
In related news, Piper Sandler analysts released insights from the 2025 CIO Survey, indicating a strong outlook for IT spending. Companies like Microsoft (NASDAQ:MSFT), Snowflake (NYSE:SNOW), and Salesforce (NYSE:CRM) were identified as potential beneficiaries of increased IT spending.
Microsoft reported a 16% year-on-year increase in Q1 FY2025 revenue, reaching $65.6 billion, with its cloud unit, Microsoft Cloud, reporting robust performance. TD Cowen, Citi, Mizuho (NYSE:MFG), and Goldman Sachs have maintained their positive ratings on Microsoft's stock.
Meanwhile, Workday Inc (NASDAQ:WDAY). shares maintained a Buy rating and a price target of $290.00, as reiterated by TD Cowen. Despite slight revisions in the fiscal year 2025 subscription revenue guidance and initial fiscal year 2026 guidance, the firm expressed confidence in Workday's long-term prospects.
Similarly, Oppenheimer maintained an Outperform rating on Workday, emphasizing the company's potential for durable, profitable growth despite slower revenue recognition from significant contracts.
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