Morgan Stanley: Workday (WDAY.US) analyst's daily analysis boosts investor confidence, reiterating a target price of $255.

After holding the annual Analyst Day conference at Workday (WDAY.US), Morgan Stanley released a research report reaffirming its "hold" rating on the company, with a target price of $255. Morgan Stanley pointed out that during the Analyst Day conference, the management provided a strong argument for why Workday's fundamental data, processes, and customer base provide the foundation for success in the field of artificial intelligence. Equally important, the new targets for the fiscal year 2028 balance growth with margin improvement, aiming to maintain a 20% compound annual growth rate in free cash flow. Seizing this opportunity and effectively executing will be key. During the Workday 2025 Analyst Day conference, the management presented a revised financial framework, clearly stating Workday's commitment to achieving a sustained compound annual growth rate of over 20% in free cash flow per share by the fiscal year 2028, with a growth rate plus margin of 48% in the fiscal year 2028. While achieving these goals may depend to some extent on the subscription revenue compound annual growth rate after fiscal year 2028, the management presented lower (12%), moderate (13-14%), and higher (15%) growth scenarios, which investors are looking forward to and may give them more confidence in the long-term sustainability of Workday's free cash flow growth story. Additionally, the management outlined Workday's positioning in AI and the expansion of the Workday platform. Newly disclosed AI metrics show that annual contract revenue for AI-based solutions has exceeded $4.5 billion, with a year-on-year growth of over 50%, while annual contract revenue for its emerging agent solutions has exceeded $1.5 billion, with a year-on-year growth of over 200%. On the growing platform, Workday is enhancing data processing capabilities through its new "Data Cloud" service, continuously introducing more partners to the network (doubling to over 1300), expanding the developer user base (doubling the number of developers), achieving significant results through new acquisitions, and introducing a new profit model through Flex Credits.