Workday (WDAY) Stock Forecast & Price Target

Workday has demonstrated significant revenue growth, with subscription revenue rising 14.5% year-over-year and total revenue projected to increase from $1.57 billion in FY2017 to $8.45 billion in FY2025, indicative of robust demand for its cloud-based solutions. The company has steadily improved its free cash flow, from $228 million to a projected $2.19 billion, alongside a notable increase in operating margins from 14% to 26%, suggesting ongoing operational efficiency and profitability enhancements. Additionally, management's positive outlook on international revenue growth and the strategic shift to partner-driven professional services further underpin a favorable growth trajectory for the company.

The outlook for Workday's stock is negatively impacted by a notable slowdown in growth, which raises concerns about the company's ability to maintain profitability, particularly if margins reverse in response to performance issues. Additionally, the potential disruption from generative AI poses risks to Workday's underlying business model, suggesting that monetization strategies may become less favorable. Furthermore, the company faces downside risks including underperformance in large enterprise deals and international markets, which could hinder its future revenue growth, leading to lower expectations for fiscal years 2027 and beyond.