Key Takeaways
- Two major Wall Street firms downgraded Workday shares to Hold/Neutral ratings on Monday
- Shares declined 2.9% to $192.95 in premarket hours following Friday’s 3.8% retreat
- WDAY has climbed 76% from its June 22 low of $113.04
- BTIG warns that Street estimates for fiscal 2027 growth appear “too optimistic”
- Shares spiked 18% last Thursday on reports Silver Lake explored a potential buyout
Workday shares are retreating following one of the most aggressive rallies the stock has seen in recent years. On Monday, a pair of prominent Wall Street analysts applied the brakes, cutting their ratings after the stock climbed 76% from its recent trough.
Deutsche Bank lowered its stance to Hold from Buy, though it lifted its price objective to $220 from $180. BTIG shifted to Neutral from Buy, removing its prior $175 target completely.
In Monday’s premarket session, Workday retreated 2.9% to $192.95. The decline followed a 3.8% selloff on Friday.
Shares had rocketed nearly 18% higher last Thursday following a Reuters report indicating that private-equity giant Silver Lake had engaged in exploratory discussions about taking Workday private.
That jump contributed to a 24% gain for WDAY during August. However, the stock remains down 7.5% year-to-date in 2026 and has fallen 14% over the trailing twelve months.
The Case for Caution From Wall Street
BTIG’s Allan Verkhovski clarified that his downgrade wasn’t solely driven by valuation metrics. He highlighted Street expectations for fiscal 2027 subscription revenue growth as problematic, describing them as “too optimistic.”
Verkhovski had launched coverage with a Buy rating back in December, arguing that Workday was positioned to accelerate its AI capabilities with “minimal AI disruption risk.” His updated view suggests a private ownership structure might actually facilitate that transformation more effectively.
Deutsche Bank reinforced the valuation argument. Between June 1 and August 14, WDAY appreciated approximately 26%, while comparable names including ServiceNow, Salesforce, Autodesk, Adobe, and Intuit declined roughly 4% on average during that same window.
The firm continues to regard Workday as among the highest-caliber franchises in the enterprise software landscape, citing its 76% gross profit margin, business-critical offerings, and robust customer loyalty. The rating cut doesn’t reflect deteriorating business fundamentals.
Implications of a Potential Buyout
BTIG’s Verkhovski highlighted that Workday continues to represent a “logical private-equity target,” underpinned by a 97% gross retention rate and dependable revenue predictability.
He outlined a straightforward scenario: should negotiations with Silver Lake collapse and shares drift back toward $175, the current risk-reward profile appears balanced. Conversely, if a transaction materializes, there’s meaningful upside potential from a deal valued above $50 billion.
Evercore ISI’s Kirk Materne wrote on Friday that Silver Lake’s reported interest indicates the “terminal AI risk” attributed to enterprise software platforms may be exaggerated.
Materne suggested that a Workday acquisition could bolster more constructive views on ServiceNow and Salesforce, both of which dropped more than 2.5% on Monday.
BMO Capital maintained its Outperform rating. UBS increased its price target to $220 while keeping a Neutral stance. Morgan Stanley took a contrarian position, cutting to Underweight with a $145 target. CLSA launched coverage with an Underperform rating and a $92 price objective.
Technical indicators show WDAY’s RSI currently residing in overbought territory, per InvestingPro data.
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