Bradley Sills, an analyst from Bank of America Securities, reiterated the Buy rating on Workday. The associated price target remains the same with $265.00.
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Bradley Sills has given his Buy rating due to a combination of factors that indicate a positive outlook for Workday. One of the primary reasons is the solid deal activity observed in key sectors such as commercial business, healthcare, and financial services, particularly in human capital management (HCM). Additionally, there is optimism for future growth, especially with the company’s strong performance in Europe and promising add-on deals like the Extend no-code/low-code development offering.
Another factor contributing to the Buy rating is the expectation of robust growth in current remaining performance obligations (cRPO) and margins. Sills anticipates a 16.5% growth in Q3 cRPO in an upside scenario, with consistent growth expected into Q4. Furthermore, Workday’s focus on productivity and the recent margin target increase to 35% by FY28 support the potential for a beat and raise in financial results. Despite concerns about AI disruption, the company’s updated growth and margin targets suggest a more achievable path to free cash flow growth, positioning Workday for potential multiple expansion as it aligns with industry growth rates.
In another report released on November 11, RBC Capital also maintained a Buy rating on the stock with a $340.00 price target.