TLDR Jefferies maintains its Hold rating on Workday stock with a $210 price target. Workday cuts its 2028 growth forecast as subscription revenue loses momentum. Workday’s $600 million AI rev
Workday Inc. stock traded at $185.00, gaining 0.40%, as Jefferies maintained its Hold rating and $210 price target. The investment bank cited weaker subscription growth, growing competition, and leadership departures as challenges facing the cloud software provider. Workday’s expanding artificial intelligence business has yet to reverse the slowdown in its core software operations.
Jefferies maintained its neutral position on Workday stock as the company’s subscription revenue growth continued to face pressure. The bank wants annual subscription growth to exceed 11% before adopting a more positive view of the business. Its assessment highlights the widening performance gap between Workday and several major enterprise software competitors.
Workday recorded 13% revenue growth during calendar year 2025, slightly outperforming SAP and Oracle over the same period. Jefferies expects growth to decline to 10% by 2028, potentially placing Workday behind other major back-office software providers. The forecast reflects four consecutive years of slowing expansion and reduced expectations for the company’s longer-term financial performance.
Workday lowered its fiscal 2028 subscription revenue growth target from 13%–14% to 11%, reflecting weaker business momentum. Management also reduced its operating margin target from 35% to 33%, signaling narrower expectations for future profitability. Jefferies projects a Rule of 43 performance measure in 2027, combining expected revenue growth and operating margins.
Workday continues expanding its artificial intelligence products, although the emerging business contributes a relatively small share of total revenue. Its AI annual recurring revenue stands near $600 million, representing approximately 6% of the company’s overall revenue base. Workday launched general availability for Sana in March 2026, adding another product to its AI software portfolio.
Jefferies identified competitive challenges as SAP and Oracle continue expanding their positions across enterprise software markets worldwide. SAP benefits from customer migrations to its S/4HANA platform, while Oracle gains support from its growing cloud infrastructure operations. Workday has secured less than two percentage points of additional market share in key segments over four years.
The company’s backlog growth also slowed to 14% during the second calendar quarter, compared with 26% at SAP. Workday’s operating margin remains in the low 30% range, while several comparable software providers approach 40%. These differences place greater pressure on Workday to improve profitability while developing competitive products and defending existing customer relationships.
Leadership turnover has introduced another challenge as Workday prepares for its upcoming Rising conference and future business expansion. The company experienced departures involving its chief executive, chief revenue officer, and chief technology officer within eight months. These changes affect several senior positions responsible for corporate strategy, commercial performance, and technology development during a period of slowing growth.
Workday faces opportunities and challenges across international markets, which account for half its estimated $160 billion addressable market. Overseas operations contribute approximately 25% of company revenue, despite representing a much larger share of potential demand. International growth has also slowed for seven consecutive years, limiting the contribution from markets beyond the company’s established customer base.
Workday shares have declined approximately 13% this year, while their valuation remains around 20% below comparable software companies. Jefferies attributes part of that discount to slower growth, with Workday trailing peers by approximately two percentage points. The upcoming Rising conference gives management an opportunity to outline its AI strategy, leadership priorities, and plans for subscription growth.
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