Workday may surprise as expectations are 'muted' going into Q3 results: Baird
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Workday (NASDAQ:WDAY) is slated to report third-quarter results after the close of trading and given the weakness surrounding the global economy and some areas of enterprise software, expectations are "muted" going into the results, investment firm Baird said.
Analyst Mark Marcon, who has an outperform rating and $235 price target on Workday (WDAY) shares, noted that it's likely selling cycles have lengthened as the economy gets weaker, but all eyes will be on bookings and the company's backlog. 
"While our expectations for this quarter are more muted, we do believe valuation relative to long-term potential continues to be attractive considering high net revenue retention, strong growth potential given FINS moving to the cloud, and high margins on recurring business," Marcon wrote in a note to clients.
The analyst updated his estimates for the quarter, and he now expects Workday (WDAY) to earn an adjusted 90 cents per share on $1.586B in revenue, slightly above consensus.
A survey of analysts expect Workday (WDAY) to earn 84 cents per share, excluding one-time items, on $1.59B in revenue.
Marcon also noted that Workday (WDAY) management has been upbeat on its opportunity in human resources as well as financials, but like most other software companies, it is not immune to the selling cycle. So in turn, there could be some concern about the company's fourth-quarter guidance, especially if larger deals continue to take longer to get done.
Earlier this month, investment firm Monness, Crespi, Hardt downgraded Workday (WDAY), citing the recent rally in tech stocks and worries headed into next year.