KeyBanc initiates coverage on Workday

KeyBanc Capital Markets initiated coverage on Workday, Inc. (NASDAQ:) with an Overweight rating and established a 12-month price target of $310.00 on the stock as analysts believe the company is well positioned to continue driving share gains.

Workday has recently made significant strides in strengthening its Financials’ market strategy by bolstering its dedicated oCFO sellers across various sectors. A move that has resulted in an increase in comprehensive platform deals involving both HCM and Financials. At the same time, there has been a notable surge in full platform deals and in new Financials customer growth.

KeyBanc analysts also see an enticing, albeit early, opportunity in international expansion, with an estimated $80 billion global market potential and only a 5% current penetration rate.

Workday has significantly invested in its international go-to-market setup in recent years. KeyBanc anticipates that this strategic focus on international markets could result in continued acceleration of revenue, surpassing the growth in the U.S.

KeyBanc predicts that over the next five years, Workday’s international share of revenue could rise to the mid-to-high 20% range and potentially exceed 50% in the long term.

Furthermore, due to recent changes and investments in international markets and Financials, along with a stable-to-improving macroeconomic environment, KeyBanc analysts expect Workday to slightly speed up its subscription growth in FY25 (CY24). KeyBanc also believes the company can sustain a high-teens subscription growth rate and potentially exceed 20% growth in the long term.

Shares of WDAY are trading down 0.71% Thursday morning.