RBC Capital maintains Outperform rating on Workday ahead of annual event

RBC Capital analyst Rishi Jaluria reiterated an Outperform rating and $240 price target on Workday (NASDAQ: WDAY) ahead of the company's Workday Rising event and financial analyst session scheduled for October 13.

Workday shares closed at $186.14, while the $240 price target implies a 16.6x EV/CY27E revenue multiple, compared to the current trading multiple of 12.9x.

According to the note, Workday's AI annual recurring revenue reached approximately $600M in the second quarter of fiscal year 2027, representing growth of more than 200% year-over-year. More than 5,500 customers are using at least one organically developed AI agent. AI attach rates on net new deals exceeded 50% in Q2, and AI contribution to expansion deals averaged approximately 50% larger in value.

Workday's Sana product, positioned as a default home screen for the platform's more than 80 million users, saw 12,000 internal users build 22,000 custom agents in three weeks, with monthly active users growing approximately 190% year-over-year. New Sana customers include AstraZeneca, Novartis, and Caterpillar. Flex Credits, Workday's consumption-based monetization mechanism, had 200 customers signed as of Q2.

The analyst noted that management has characterized the current phase as "adoption over monetization" and that the firm does not anticipate new long-term financial targets to be announced at the event.

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