Citizens Downgrades Workday, Cuts Fiscal 2028 EPS Forecast to $12.72
Citizens downgraded Workday to Market Perform, citing CEO Aneel Bhusri’s return will take time to reset strategy for AI competition, and cut its fiscal 2028 EPS forecast to $12.72, noting valuation at 2.9x 2027 revenue. The firm flagged omission of the 13% fiscal 2027 growth target in its Form 8-K.
1. Broker Downgrade
Citizens downgraded Workday to Market Perform from Market Outperform following Aneel Bhusri’s announcement to resume the CEO role, noting that repositioning the product roadmap for intensified AI demands will require significant time and investment. The firm maintained its Q4 non-GAAP EPS estimate of $2.35 on $2.52 billion revenue and its fiscal 2027 EPS forecast of $10.70 on $10.7 billion revenue.
2. Revised Fiscal 2028 Forecast
The brokerage cut its fiscal 2028 EPS estimate to $12.72 from $13.13, highlighting that Workday is trading at 2.9x estimated 2027 enterprise value to revenue and 8.4x EV to free cash flow, both below large-cap technology peer medians and reflecting uncertainty around management changes.
3. Growth Target and Guidance Concerns
Citizens pointed out the omission of Workday’s 13% fiscal 2027 subscription revenue growth target in its Form 8-K, raising concerns that updated guidance may fail to meet investor expectations. The firm also warned that fully audited Q4 results could disappoint when detailed alongside the preliminary preannouncement.
4. Intensifying AI Competition
Analysts highlighted mounting competition from ServiceNow Control Tower, Microsoft Agent 365 and OpenAI’s Frontier, which may pressure Workday’s transition from a traditional SaaS provider to an AI-driven enterprise solutions platform.