TLDR
- Deutsche Bank and BTIG both downgraded Workday stock to Hold/Neutral on Monday
- WDAY fell 2.9% to $192.95 in premarket trading after dropping 3.8% on Friday
- The stock has surged 76% since its June 22 closing low of $113.04
- BTIG flagged that consensus growth expectations are “too optimistic” for fiscal 2027
- Silver Lake was reported to be in acquisition talks, which drove an 18% spike last Thursday
Workday stock is pulling back after one of its sharpest rallies in years. Two Wall Street firms hit the brakes on Monday, downgrading the stock after a 76% run-up from its recent low.
Deutsche Bank cut its rating to Hold from Buy, while raising its price target to $220 from $180. BTIG moved to Neutral from Buy, pulling its previous $175 price target entirely.
Workday fell 2.9% to $192.95 in premarket trading on Monday. That came after a 3.8% drop on Friday.
The stock had surged nearly 18% last Thursday after Reuters reported that private-equity firm Silver Lake had been in discussions with Workday about a potential take-private deal.
That spike pushed WDAY up 24% for the month of August alone. But despite that run, the stock is still down 7.5% in 2026 and off 14% over the past 12 months.
Why Analysts Are Stepping Back
BTIG analyst Allan Verkhovski said the downgrade was not just about valuation. He pointed to consensus fiscal 2027 subscription revenue growth expectations as a key concern, calling them “too optimistic.”
Verkhovski had initiated his Buy rating in December, believing Workday was set to accelerate AI adoption with “minimal AI disruption risk.” He now says a private-market environment may actually be better for that transition.
Deutsche Bank echoed the valuation point. WDAY appreciated roughly 26% from June 1 through August 14, while peers like ServiceNow, Salesforce, Autodesk, Adobe, and Intuit fell about 4% on average over the same stretch.
The bank still views Workday as one of the highest-quality franchises in enterprise software, with a 76% gross profit margin, mission-critical products, and strong customer retention. The downgrade is not about weakening fundamentals.
What a Deal Could Mean
BTIG’s Verkhovski noted Workday remains a “logical private-equity target,” supported by a 97% gross retention rate and strong revenue visibility.
He laid out the math clearly: if talks with Silver Lake break down and the stock reverts to around $175, the risk-reward is now balanced at current levels. But if a deal gets done, there is upside from a $50 billion-plus transaction.
Evercore ISI analyst Kirk Materne wrote Friday that Silver Lake’s interest suggests the “terminal AI risk” attached to enterprise software may be overdone.
Materne added that a Workday deal could support more bullish sentiment around ServiceNow and Salesforce, both of which fell over 2.5% on Monday.
BMO Capital kept its Outperform rating. UBS raised its price target to $220 but held its Neutral rating. Morgan Stanley went the other direction, downgrading to Underweight with a $145 target. CLSA initiated with an Underperform rating and a $92 target.
The RSI on WDAY currently sits in overbought territory, according to InvestingPro data.
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