Bank of America Resumes Neutral Rating on Workday
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: seekingalpha
- Rating Resumption: Bank of America has resumed coverage of Workday with a Neutral rating and a $140 price target, as analyst Tal Liani notes that while Workday is a mission-critical system with a strong installed base, revenue growth has decelerated from approximately 30% to mid-to-low teens, with projections of 10-12% growth over the next three years.
- Growth Deceleration: Over the past 7-8 years, Workday's revenue growth has significantly slowed, leading analysts to shift focus from 'franchise quality' to 're-acceleration visibility', with guidance indicating a normalized lower-growth trajectory for its SaaS business.
- Strategic Necessity of AI: Liani highlights that artificial intelligence has become a strategic necessity for Workday, albeit accompanied by economic uncertainty; however, the company's deep entrenchment in HCM, payroll, and core employee data mitigates outright displacement risks.
- Value Compression Risks: Analysts warn of value compression risks as seat-based monetization faces pressures from headcount rationalization, potential contract pricing and duration pressures, and a gradual shift towards agent-based pricing, noting that while Workday's responses through Illuminate and Sana are strategically sound, monetization remains in its infancy and may take time to offset pressures on the traditional seat model.
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Analyst Views on WDAY
Wall Street analysts forecast WDAY stock price to rise
31 Analyst Rating
22 Buy
9 Hold
0 Sell
Moderate Buy
Current: 130.010
Low
235.00
Averages
275.19
High
325.00
Current: 130.010
Low
235.00
Averages
275.19
High
325.00
About WDAY
Workday, Inc. is an enterprise artificial intelligence (AI) platform for managing people, money, and agents. The Company provides organizations with cloud solutions powered by artificial intelligence (AI) to solve business challenges, including supporting and empowering the workforce, managing finances and spending. It offers a suite of cloud-based enterprise solutions that address the needs of the C-suite on a platform designed to be open, extensible, and configurable, allowing integration with other applications and the ability for customers and partners to build custom applications. It offers Workday Build, which is an open developer platform that provides customers and partners with the ability to create and share AI-powered solutions. It serves financial services, government, healthcare, higher education, hospitality, manufacturing, professional and business services, retail, technology and media, and transportation.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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