On Tuesday, KeyBanc Capital Markets maintained its Overweight rating on Workday (NASDAQ:WDAY), a leader in enterprise cloud applications for finance and human resources, with a stock price target of $330.00. The affirmation of the rating follows Workday's release of its fourth-quarter results, which showed performance above expectations, but with a smaller margin than usual.
Workday's financial results for the fourth quarter indicated a steady performance, though the beat was less significant than typically seen in the company's financial history. Despite this, the firm's guidance for the first quarter's calculated remaining performance obligations (cRPO) growth was set at 17.5-18.5%, suggesting a slight deceleration compared to previous periods.
The softer cRPO growth outlook for the upcoming quarter marks a modest slowdown, which contrasts with investor expectations that had previously leaned towards acceleration. This shift in growth trajectory has been noted as an area of interest as it diverges from prior market sentiment.
Nevertheless, KeyBanc expressed optimism regarding Workday's international business, which has experienced acceleration for two consecutive quarters. The firm's ongoing improvements in its go-to-market strategy, along with anticipated updates to pricing and packaging, were also highlighted as positive factors supporting the Overweight rating.
The analyst from KeyBanc underscored the company's international strength and market strategy enhancements as encouraging signs, despite the conservative cRPO growth guidance. The statement emphasized that, while the guidance indicates a slight deceleration, there are still significant positive developments contributing to the firm's favorable outlook on Workday.
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