Workday (WDAY) PT Lowered to $275 at BofA Securities

BofA Securities analyst Brad Sills lowered the price target on Workday (NASDAQ: WDAY) to $275.00 (from $310.00) while maintaining a Buy rating.

The analyst commented: "Workday has 4% share of the $188bn ERP and is positioned to continue gaining share as an emerging cloud leader. We expect HCM growth to track to the high end of 12-15% industry growth rate from steady cross sell of modules with <10% penetration into the installed base of 5,000+ customers. Reiterate Buy. The stock is trading at a reasonable 24x C25E FCF (using AH price of $232), or 1.1x adjusted for 22% growth (GARP peers at 1.0x 23% growth). We believe that sustainable low 20s FCF growth from balanced growth and margin (more weighed to margin NT) should provide support at the current valuation. We fine-tune our estimates and lower our PO to $275 (from $310), representing 30x C25E FCF (1.4x growth-adjusted) from 32x previously, to reflect the near-term cRPO deceleration. Based on the AH price of $232, our $275 PO implies 19% upside."

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