Workday stock price target raised to $300 from $275 at Evercore ISI

Evercore ISI has raised its price target for Workday to $300 with an Outperform rating, citing the company's strong financial health, strategic AI investments, and acquisitions like Sana that are driving platform evolution. Despite early FY27 subscription revenue guidance slightly below Street expectations, the firm highlights a robust CY27 free cash flow projection of $15 per share, bolstered by operating margin expansion and a $5 billion share buyback program. This positive sentiment is largely echoed by other analysts, who maintain favorable ratings and price targets, recognizing Workday's potential for durable growth and strong free cash flow generation in an AI-focused environment.

Analysis

Analyst sentiment for Workday (WDAY) is broadly positive, anchored by Evercore ISI's recent price target increase to $300.00, citing a clear strategy for durable growth in an AI-focused environment. This optimism is underpinned by the company's strong financial health, evidenced by a current ratio of 2.1 and a balance sheet with more cash than debt. While the early FY27 subscription revenue guidance of 13% growth is slightly below consensus, analysts are emphasizing the robust free cash flow outlook, with a projection of $15 per share in CY27. This is expected to be driven by operating margin expansion to 35% by FY28 and a significant $5 billion share buyback program. Strategic initiatives are key to the bull case, including the acquisition of Sana to enhance the UI, a partnership with Microsoft for Azure AI integration, and early AI monetization success demonstrated by approximately $150 million in annual recurring revenue from AI agents year-to-date. The consensus is strong, with BofA, KeyBanc, and JMP reiterating buy-equivalent ratings, and a notable upgrade from Piper Sandler to Neutral from Underweight, signaling a wider acceptance of the company's strategic AI pivot.

Key Decisions for Investors

• Investors should weigh the slightly below-consensus subscription revenue guidance against the company's strong projected free cash flow generation of $15 per share by CY27 and a substantial $5 billion share buyback program.
• The current valuation of approximately 15x EV/CY27 FCF, as highlighted by Evercore, presents a potentially attractive entry point for those with a positive six-month to multi-year view on the company's AI-driven growth trajectory.
• Monitor the execution of the new flex credit pricing model and the integration of the Sana acquisition, as these are critical factors in achieving the targeted 12-15% subscription revenue CAGR and validating the positive analyst revisions.