Investing.com - Workday (NASDAQ:WDAY) announced Monday that co-founder and former CEO Aneel Bhusri is immediately returning to the chief executive position, replacing Carl Eschenbach who is stepping down after three years as CEO. The leadership change comes as the stock has fallen approximately 40% over the past year and is currently trading near its 52-week low of $156.87.
Eschenbach is also vacating his position on the company's board of directors. The leadership change comes as the enterprise software company navigates the evolving artificial intelligence landscape. According to InvestingPro, Workday remains a prominent player in the Software industry with management actively buying back shares despite recent challenges.
Needham maintained its Buy rating on Workday stock with a $300.00 price target following the announcement. The research firm suggested the change was "more driven by the need to move faster on the product side in the new AI-driven paradigm" rather than sales execution issues. This target represents significant upside potential, with InvestingPro data showing the stock is currently undervalued compared to its Fair Value estimate.
Workday simultaneously confirmed its fourth-quarter financial results would align with previous guidance, excluding a restructuring charge that will reduce GAAP operating income. The company did not provide specific figures in its announcement.
The timing of the leadership transition at the beginning of a new fiscal year supports Needham's initial checks suggesting an "in line or muted" fourth-quarter sales period for the human resources and financial management software provider.
In other recent news, Workday has announced a significant leadership change, with co-founder Aneel Bhusri returning as CEO, replacing Carl Eschenbach, who is stepping down immediately. This transition comes as Workday embarks on a strategic focus on the new AI era, with Eschenbach shifting to a strategic advisor role. The move has prompted varied reactions from analysts. Stifel has lowered its price target for Workday to $175, citing the CEO change, while maintaining a Hold rating. Meanwhile, Oppenheimer has retained its Outperform rating and a $270 price target, despite the sudden leadership shift. Evercore ISI has also adjusted its price target to $200 from $300 due to concerns about Workday's growth, particularly mentioning a "leaky bucket" growth issue. These developments come ahead of Workday's upcoming earnings call, as the company navigates its new fiscal year.