Derrick Wood, an analyst from TD Cowen, maintained the Buy rating on Workday. The associated price target was lowered to $290.00.
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Derrick Wood’s rating is based on several strategic initiatives and financial metrics that Workday has put in place. The company has announced a significant $5 billion stock buyback plan through FY27, which is complemented by Elliott Management’s disclosure of a $2 billion stake. This indicates strong institutional confidence in Workday’s future prospects. Additionally, Workday’s advancements in AI, with an AI-driven annual recurring revenue (ARR) exceeding $450 million and significant growth in Agentic AI ARR, showcase the company’s innovative capabilities and potential for future growth.
Workday has also adjusted its growth and margin outlook, presenting a more conservative growth target but with higher operational margins. The management’s guidance suggests a focus on achieving a balance between growth and profitability, aiming for a Rule of 48 and a free cash flow per share of approximately $15 by FY28. Furthermore, Workday’s strategic mergers and acquisitions, such as the acquisition of Sana Labs, are expected to drive substantial value, reinforcing the company’s growth trajectory. These factors collectively underpin Derrick Wood’s Buy rating for Workday.
In another report released today, Bank of America Securities also reiterated a Buy rating on the stock with a $265.00 price target.