Cramer says sell-off in Workday stock today may be an ‘overreaction’

Workday Inc (NASDAQ: WDAY) says annual growth in its subscription revenue will likely be a bit shy of its previous forecast. Its shares lost 10% on the announcement this morning.  

Workday is accounting for macro uncertainty

The human resources technology company cited “uncertain economic environment” today as it guided for a 17% to 19% increase in its annual subscription revenue over the next three years.

Its previous outlook was for that growth to be in excess of 20%.

According to Carl Eschenbach – the Co-Chief Executive of Workday Inc – macroeconomic challenges and more broadly the debate around a possible recession will likely continue in the coming months and, so, it made sense to factor that narrative into the guidance.

Workday stock is still up more than 20% versus the start of this year.

Jim Cramer shares his view on Workday stock

Workday Inc has opted to trim its long-term outlook even though it came in comfortably ahead of Street estimates in its latest reported quarter.

On CNBC’s “Squawk on the Street”, famed investor Jim Cramer agreed that the update today was concerning. Still, he fixated on the company’s solid track record and said:

Workday is a really fabulous company … this company has been straight-shooting so maybe we can feel whether the stock’s [move] is an overreaction.

Needham analyst Scott Berg also said on Thursday that the updated outlook may just be an attempt to lower the bar amidst the economic uncertainty. His $250 price target on Workday stock suggests about a 20% upside from here.