Workday’s Stable Growth and Promising Financial Trajectory Justify Buy Rating Despite Conservative Outlook

In a report released yesterday, Bradley Sills from Bank of America Securities reiterated a Buy rating on Workday (WDAY – Research Report), with a price target of $295.00.

Bradley Sills has given his Buy rating due to a combination of factors that highlight Workday’s stable growth and promising financial trajectory. Despite a slightly disappointing outlook, the company’s Q1 results were in line with expectations, with a notable 15.6% year-over-year growth in current remaining performance obligations (cRPO), which surpassed the anticipated 15%. This growth, bolstered by ‘tenant’ deals, underscores the recurring nature of Workday’s business model and potential for future expansion as these projects mature.
Furthermore, Workday’s strategic initiatives in platform deals and medium enterprise sectors are showing healthy results across geographies. The company is effectively executing on its balanced growth strategies, evidenced by an increase in fiscal year 2025 margin projections and a solid 260 basis points margin expansion this year. Despite a conservative fiscal year 2026 outlook, the potential for upside remains if macroeconomic conditions remain stable. With a projected 21% free cash flow compound annual growth rate over three years and the stock trading at a favorable valuation, Sills sees a solid risk/reward scenario, justifying the Buy rating.

WDAY’s price has also changed slightly for the past six months – from $267.750 to $272.070, which is a 1.61% increase.