Workday Inc (NASDAQ:WDAY) stock rose 0.59% (As on September 18, 11:17:22 AM UTC-4, Source: Google Finance) after Piper Sandler upgraded the company, a $58.5 billion market cap software company with strong financial health metrics and 14% revenue growth, from Underweight to Neutral, raising its price target to $235.00 from $220.00. The upgrade follows Piper Sandler’s observations from the recent Workday Rising conference, where the firm noted Workday has accelerated efforts to increase its relevance in artificial intelligence through multiple strategic initiatives.
Meanwhile, Workday has completed three AI acquisitions in the past 30 days, including Sana, Paradox, and Flowise, adding over 1,300 new employees to its workforce. The company has also introduced new Flex Credit options to supplement its employee-based pricing model. Additionally, Workday has launched a new data cloud featuring zero-copy interfaces with Databricks, Snowflake, and Salesforce, expanding its data integration capabilities. Piper Sandler cited Workday’s 15% year-to-date stock decline (compared to the S&P 500’s 12% gain) and the company’s enterprise value to free cash flow ratio reaching a 10-year low of 18.8x as factors contributing to a more balanced risk-reward profile.
In addition, the company said that it would buy AI firm Sana for about $1.1 billion, underscoring growing consolidation in the HR software sector while companies look to integrate the booming technology into their products in response to evolving customer demands. Sana, founded in 2016, allows companies to create AI agents to help automate specific tasks. As a part of Workday, Sana will continue to develop such tools. The latest transaction is expected to close in the fourth quarter of Workday’s fiscal year 2026, ending January 31.
In other recent news, Workday has reported its second-quarter earnings, which have garnered varied reactions from analysts. RBC Capital maintained its Outperform rating and a $340 price target, noting a modest beat in Q2 earnings. Meanwhile, KeyBanc Capital Markets lowered its price target to $285, citing concerns about the company’s growth trajectory despite exceeding expectations in several areas, including subscription revenue and operating margin. Piper Sandler also adjusted its price target downward to $220, describing the results as “better-than-feared” but insufficient to shift investor sentiment.
Needham kept its Buy rating with a $300 price target, anticipating a potential reduction in Workday’s fiscal year 2027 subscription revenue growth target from over 15% to around 13%. TD Cowen reiterated a Buy rating with a $310 price target, praising the company’s return to historical contracted remaining performance obligation levels.