Bank of America Securities analyst Bradley Sills reiterated a Buy rating on Workday yesterday and set a price target of $265.00.
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Bradley Sills has given his Buy rating due to a combination of factors that indicate Workday’s strong positioning in the market. Despite concerns about potential growth limitations due to layoffs within its customer base, Workday has shown resilience with year-over-year seat count growth and a slight beat in organic current remaining performance obligation (cRPO) growth. This suggests that the company is effectively countering bearish sentiments.
Additionally, Workday’s advancements in AI and agent technology are noteworthy. The company has reported a 1.5% increase in annual recurring revenue (ARR) from AI and agents, excluding recent acquisitions, which indicates early success with products like recruiting and payroll agents. Furthermore, Workday’s focus on integrating new acquisitions into its Illuminate agent platform is expected to enhance its AI contributions. While there are still questions regarding long-term margin expansion and stock-based compensation, the company’s reaffirmed targets and recent margin improvements underscore its commitment to balanced growth. Thus, Sills reiterates a Buy rating with a price objective of $265, reflecting confidence in Workday’s ability to capture a significant share of the human capital management and financial applications market.