Workday showcased strong operating margins and free cash flow growth, along with accelerating AI adoption at its Analyst Day. With guidance pointing to higher margins and $15 free cash flow per share by 2028, Goldman Sachs analyst Kash Rangan maintains a Buy rating with a price forecast of $280.

Rangan turned more positive post-Analyst Day, highlighting Workday’s financial durability and progress in AI adoption. He projects subscription revenue growth of 13%–14% CAGR through 2028, reset from 15% through 2027, with rising operating leverage creating a favorable setup for investors.

Management targets operating margins of 35% by 2028, up from the previous range, and free cash flow per share of $15 by 2028, 12% above consensus. AI initiatives are gaining traction, with agentic AI contributing over $150 million in annualized recurring revenue.

Financial estimates support Rangan’s view, with projected revenues of $9.52 billion in 2026 and $10.77 billion in 2027, along with EPS estimates of $9.09 and $11.29 for those years respectively. He compares Workday to Intuit, suggesting a similar growth trajectory with compounding cash generation.

With over 75 million users and expansion across financials, analytics, and HCM, Rangan believes Workday could exceed $20 billion in revenue with 35%+ margins long term. WDAY shares surged 9.08% to $238.92 post-news.

Read more at Yahoo Finance: Workday AI Push Signals Durable Growth And Sharper Margins Ahead