Analyst Scott Berg of Needham maintained a Buy rating on Workday (WDAY – Research Report), retaining the price target of $300.00.
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Scott Berg has given his Buy rating due to a combination of factors including Workday’s recent strategic restructuring and its expected impact on the company’s financial health. The company announced an 8.5% reduction in its workforce, which aligns its resources towards platform expansion while optimizing its investment levels to support a revenue growth rate closer to 15%.
This restructuring is projected to enhance Workday’s operating margins by approximately 320 basis points, equating to an annual increase of $270 million. Although the exact areas affected by the workforce cuts are yet to be fully detailed, it’s believed that the reductions were mainly in sales and marketing, and general and administrative areas, with research and development largely unaffected. This indicates a continued focus on product innovation. Additionally, the update to the fourth-quarter guidance, which aligns with or exceeds revenue expectations, suggests that the workforce reduction is not due to a decline in market demand.
According to TipRanks, Berg is an analyst with an average return of -2.1% and a 47.44% success rate. Berg covers the Technology sector, focusing on stocks such as Salesforce, Five9, and UiPath.
In another report released today, Morgan Stanley also maintained a Buy rating on the stock with a $330.00 price target.