<div id="readability-page-1"><img width="848" height="565" src="https://imageproxy.pbkrs.com/https://ik.imagekit.io/invezz/uploads/2021/11/133859346-s.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://ik.imagekit.io/invezz/uploads/2021/11/133859346-s.jpg"/>Needham analysts have lowered their price target for Workday (NASDAQ: WDAY) from $350 to $300 while maintaining a Buy rating.Despite this downward adjustment, the new target still represents a potential upside of 23%.This price cut followed Workday’s recent annual customer conference and analyst day, where management outlined ambitious growth plans centered around AI innovation and subscription revenue expansion.According to Needham, the company’s strategic initiatives, such as the new AI-powered Illuminate platform, should enable Workday to meet its 15% subscription revenue growth target through FY27, supported by a robust partner strategy.<h2>Canaccord Genuity agrees with Needham</h2>Other analysts have echoed Needham’s sentiment. Canaccord Genuity recently reaffirmed its Buy rating on the stock with a $300 price target, aligning with Needham’s outlook.Canaccord believes that Workday’s projected 30% free cash flow margin by FY27 will enhance its position as a reliable, cash-generating entity, even though the growth trajectory appears more gradual than event-driven.Meanwhile, Workday’s stock is trading at roughly 24x EV/FCF on 2025 estimates, which, according to Canaccord, is a reasonable valuation for a company expected to deliver over 20% cash flow growth in the coming years.<h2>Workday acquires Evisort</h2>Workday has also made headlines recently with its acquisition of Evisort, an AI-native document intelligence platform, announced on September 17, 2024.This deal aligns with Workday’s broader AI strategy, as Evisort’s technology is expected to bolster Workday’s offerings across its finance and HR platforms, providing more advanced document management and analytics capabilities.CEO Carl Eschenbach confirmed that the company is actively seeking acquisitions to drive growth without significantly diluting earnings, leveraging its $7 billion cash reserves for strategic purchases like Evisort.<h2>Workday Q2 earnings</h2>Workday’s Q2 earnings beat expectations. The company reported a 16.7% year-over-year increase in total revenue, reaching $2.085 billion, and a 17.2% rise in subscription revenue to $1.903 billion.Non-GAAP earnings per share (EPS) came in at $1.75, exceeding consensus estimates by $0.10.Workday’s operating margin improved significantly, reaching 24.9%, up from 23.6% in the prior year.The company’s 12-month subscription revenue backlog also grew by 16.1% to $6.8 billion, reflecting strong demand for its products.Despite these positive financial results, Workday faces several challenges, including weak headcount growth among its customer base, which led to tempered full-year guidance in Q1 FY25.However, management noted that this decline is starting to moderate, offering a potential sign of market recovery.Tailwinds for Workday include its strong market position in enterprise resource planning (ERP) solutions, its growing backlog of subscription revenue, and its steady cash flow generation.The company’s AI initiatives, particularly in automating HR and finance processes, could also provide a competitive edge as businesses increasingly adopt AI-driven tools.Additionally, the company is expanding aggressively into the finance sector, an untapped market where it aims to replicate its success in HR.This shift could be a significant growth driver, especially as Workday continues to roll out AI innovations and expand internationally.<h2>WDAY stock valuation</h2>Workday’s valuation remains a topic of debate among analysts. While some see the stock as fairly valued, others believe it has room for growth, particularly as the company navigates its AI-driven transformation.With a projected 15-16% revenue growth for FY25 and a goal of expanding operating margins to 30% by FY27, Workday is positioning itself as a long-term compounder.However, its ability to meet these targets will depend on several factors, including the successful integration of acquisitions like Evisort and continued execution in both the HR and finance sectors.<h2>Workday financial outlook is positive</h2>As we look ahead, Workday’s financial outlook remains positive. The company is forecasting FY25 subscription revenue between $7.7 billion and $7.725 billion, representing 17% growth.Non-GAAP operating margins are expected to hit 25.25%, slightly above previous guidance.Given this outlook, many analysts maintain a bullish stance on the stock, although the market remains cautious about the pace of growth in the current macroeconomic environment.To gain a clearer picture of the stock’s future direction, it’s essential to complement this analysis with a deeper dive into the technical indicators.By examining key levels, trend lines, and momentum signals, we can better assess whether the current price action supports a bullish outlook or if further consolidation is likely.<h2>WDAY stock: facing resistance above $260</h2>Workday’s stock made an all-time high at $311.26 in February this year but has been in a downtrend since then.Following the company’s Q1 earning announcement the stock saw a massive slump that took it from $260 levels to $200. Although the stock did bounce back and went back to $260 levels recently after the company reported its Q2 results, it found it hard to trade above $260 and has retraced since then.<figure><img width="1024" height="555" src="https://imageproxy.pbkrs.com/https://ik.imagekit.io/invezz/uploads/2024/09/WDAY_2024-09-18_22-10-06-1024x555.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://ik.imagekit.io/invezz/uploads/2024/09/WDAY_2024-09-18_22-10-06-1024x555.png"/></figure>Source: TradingViewCurrently, the stock is displaying weakness on both short-term and medium-term charts. Considering that investors who have a bullish outlook on the stock should only initiate a small long position at current levels with a trailing stop loss below the 100-day moving average.If the stock manages to give a daily closing above $265, they can add to their long positions.Traders who are bearish on the stock can take advantage of the medium-term weakness by shorting the stock on any bounce back above $250 with a stop loss at $264.8. If the weakness persists, the stock can again fall back to the $200 level where one can book profits.The post Needham lowers Workday price target to $300: Is WDAY stock still a buy? appeared first on Invezz</div>

WDAY

Needham has lowered its price target for Workday (NASDAQ: WDAY) while maintaining a Buy rating, indicating a potential upside of 23%. This adjustment follows Workday's annual customer conference, where ambitious growth plans were outlined. Analysts from Canaccord Genuity also reaffirmed a Buy rating, citing a projected 30% free cash flow margin by FY27. Workday's recent acquisition of Evisort aligns with its AI strategy. Despite challenges, the company's financial outlook remains positive, with expected subscription revenue growth of 17% for FY25.