In a report released today, Keith Weiss from Morgan Stanley maintained a Hold rating on Workday, with a price target of $255.00.
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Keith Weiss has given his Hold rating due to a combination of factors surrounding Workday’s current market position and future prospects. Despite trading at a relatively low multiple of free cash flow, Workday’s upcoming quarter does not seem poised for significant upward revisions in estimates. This is partly due to the need for Workday to demonstrate effective execution on its strategic framework, which includes achieving balanced growth and margins, managing stock-based compensation, and stabilizing organic revenue growth.
Additionally, while Workday’s revenue trends appear to be in line with expectations, there are concerns about the company’s ability to maintain stable subscription revenue amidst easier year-over-year comparisons. The ongoing challenges include potential deceleration in growth and risks associated with AI disruption affecting pricing. Furthermore, mixed channel feedback indicates that while partner performance is steady, there are challenges in the mid-market segment, particularly with implementation costs and pricing models. These factors contribute to a cautious outlook, justifying the Hold rating.
In another report released on November 10, UBS also maintained a Hold rating on the stock with a $250.00 price target.