Monness, Crespi, Hardt Cautious on Workday (WDAY): 'Hijacked by the Existential Threat Presented by the AI Complex'
Monness, Crespi, Hardt analyst Brian White reiterated a Neutral rating and {REMOVEPT} price target on Workday (NASDAQ: WDAY)
The analyst comments "Looking for Growth to Decelerate. We believe Workday will match our 1Q:FY27 revenue estimate of $2.525 billion (Street at $2.517 billion) and at least meet our EPS forecast of $2.54 (Street at $2.51). We expect operating income of $779.5 million in 1Q:FY27 and an operating margin of 30.9%, up from the 30.6% posted in 4Q:FY26 and above the 30.2% reported a year ago in 1Q:FY26. Our 1Q:FY27 sales estimate represents 13% YoY growth, a deceleration from 14.5% in 4Q:FY26, and consistent with the 13% uptick posted a year ago in 1Q:FY26. On a sequential basis, our 1Q:FY27 sales projection reflects a 0.3% QoQ decline, weaker than the four-year April quarter average of up 3%. Recall, Workday’s 1Q:FY27 outlook calls for revenue of $2.515 billion (up 12%) and a 30.5% operating margin. A Transition Year. For 2Q:FY27, we are modeling revenue of $2.633 billion (up 12% YoY; Street at $2.628 billion) and EPS of $2.55 (Street at $2.56). Recall, Workday expects subscription services revenue to rise 5% sequentially in 2Q:FY27. For FY:27, Workday expects total revenue of $10.635-10.660 billion (up 11-12%), subscription sales of $9.925-9.950 billion (up 12-13%), an operating margin of 30%, and operating cash flow of $3.45 billion. For FY:27, we are projecting revenue of $10.685 billion (up 12%; Street at $10.661 billion), subscription services sales of $9.974 billion (up 13%), an operating margin of 30.7%, and EPS of $10.56 (Street at $10.49."
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Shares of Workday closed at $118.75 yesterday.