TLDR
- Workday reports Q1 earnings Thursday after the close; analysts expect EPS of $2.52 on revenue of $2.52 billion
- The stock is down roughly 40% year-to-date and has lost 55.6% over the past 52 weeks, trading at around $126.61
- Cantor Fitzgerald cut its price target to $160 from $200, citing neutral-to-negative channel checks
- Investors will focus on subscription revenue trends, AI budget competition, and the new Flex Credits pricing model
- Eagle Capital Management sees Workday as resilient, pointing to below-normalized margins and the founder’s return as CEO as potential catalysts
Workday (WDAY) reports first-quarter earnings Thursday after the close, and the bar couldn’t feel lower.
The stock closed at $126.61 on May 20, down roughly 40% year-to-date and off more than 55% over the past 52 weeks. That’s a steep fall for a company that was once considered a blue-chip in enterprise software.
Analysts expect EPS of $2.52 on revenue of $2.52 billion — year-over-year growth of 13% and 12.5% respectively. Revenue is projected to come in just slightly below the $2.53 billion Workday posted in the prior quarter.
EPS estimates have nudged up slightly over the past 60 days, but the move is minimal. There isn’t a lot of conviction heading into Thursday’s print.
Wall Street still has a Buy consensus on the stock, with a mean price target of $178.16 — implying roughly 41% upside from current levels. But recent analyst moves tell a more cautious story.
On Tuesday, Cantor Fitzgerald cut its price target to $160 from $200. The firm kept its Overweight rating but flagged subdued expectations and neutral-to-negative channel checks.
At current prices, WDAY trades at just 12.3 times forward fiscal 2027 earnings — a notable discount to the broader software sector.
What Investors Want to Hear
Three things will drive the post-earnings reaction. First: subscription revenue growth and backlog trends. Workday has already penetrated 65% of Fortune 500 companies, leaving limited room for new large-enterprise wins.
Second, investors want to know if AI spending is pulling budget away from traditional HCM and financial management software. Cantor Fitzgerald flagged this directly — some companies appear to be shifting spend toward AI projects at the expense of enterprise apps like Workday.
Third, the street wants to see early evidence that the new “Flex Credits” consumption-based pricing model can plug the gap if seat-based revenue comes under pressure.
Workday has put roughly $3 billion into AI-related acquisitions and is pushing its Illuminate platform as its agentic AI play. But the transition creates near-term revenue uncertainty, and investors aren’t willing to give the benefit of the doubt right now.
Last quarter, Workday beat on revenue and posted a record 30.6% operating margin. That didn’t matter much — conservative full-year guidance sent the stock lower anyway, as investors zeroed in on slowing growth.
Hedge Funds Still See a Case
Eagle Capital Management included WDAY in its Q1 2026 investor letter, making a case that the market is painting the entire software sector with too broad a brush.
Eagle points out that Workday earns well below normalized margins today, leaving room to expand. They also see the return of the company’s founder to the CEO role as a potential catalyst for reigniting product development.
Eagle’s broader view: the recovery in software will be more uneven than the selloff. Some companies will be genuinely hurt by AI disruption — but others, they argue, will hold up or even benefit.
Seventy hedge fund portfolios held WDAY at the end of Q4, up from 64 the prior quarter. That uptick suggests some institutional money is still finding value at these levels.
Workday’s market cap sits at roughly $30.47 billion. Thursday’s call will show whether the story is stabilizing or still under pressure.
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