10:54 AM EDT, 09/18/2024 (MT Newswires) -- Workday's (WDAY) medium-term growth is driven by artificial intelligence, partner enablement, full-suite deals and international expansion, RBC Capital Markets said in a note Wednesday.

Despite macroeconomic challenges, about one-third of new customers in the trailing twelve months have adopted the full suite of products, with partners sourcing 9% of the new annual contract value, according to the note.

The firm said that while the management outlined strategies for artificial intelligence, geographical expansion and scale efficiency, investors may have concerns about Workday's ability to sustain a 15% growth rate due to a "lower investment profile."

Workday is leveraging artificial intelligence for efficiency with the introduction of Illuminate, which automates repetitive tasks and improves productivity through natural language processing, and other generative artificial intelligence capabilities for recruiting, expense tracking and succession planning, RBC added.

The company's current approach to generative artificial intelligence focuses on product quality and competitive position, however, "direct monetization opportunities could take shape as the company proves a strong ROI with initial use cases, such as Extend and Extend Pro," the firm said.

RBC has an outperform rating for Workday's stock at a price target of $300.

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