Analysts Cheer Workday's Solid 3Q, cRPO Upside And Share Repurchase

Mizuho analyst Siti Panigrahi maintained a Buy and lowered the price target from $220 to $200 on Workday Inc WDAY. The re-rating reflected the recent contraction of the peer average valuation multiple and his revised estimates.

Workday reported solid Q3 results, beating on revenue and operating margin but missing billings, providing some relief given the current macro uncertainty impacting other enterprise software businesses. 

Management noted continued sales cycle elongation and guided prelim FY24 subscription revenue growth which, he believes, is prudent in the current macro environment but encouraging to see operating margin expansion for FY24. 

Workday remains in a solid position to become the preeminent vendor in the back-office suite over the longer term. 

Needham analyst Scott Berg reiterated Buy and $220 price target. Workday posted a strong 3Q with revenue and operating margin outperformance and cRPO growth, suggesting demand remains healthy even as sales pipelines are elongating. 

The company also announced its first-ever share repurchase authorization. The initial FY24 guidance seems conservative. The operating margin expansion above consensus could help buoy WDAY's shares in this uncertain macro.

BMO analyst Daniel Jester reiterated Outperform with a $195 price target. Workday delivered solid 3Q23 results and upside on critical metrics.

With the forward view de-risked and a new buyback program to help offset dilution addressing a critical bear debate, he like the shares amid a relatively undemanding valuation.

KeyBanc analyst Michael Turits reiterated an Overweight and $195 price target. He cut FY24E and FY25E revenue given the FY24E guide but increased EBIT margins.

While he remains cautious regarding the potential for deferral of longer-term ERP projects in a complex macro, he was encouraged by the resilience of Workday's and other back-office vendors' business to date and continues to see catalysts for HCM and Financial modernization projects. 

Price Action: WDAY shares traded higher by 13.70% at $162.95 on the last check Wednesday.