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Workday Inc (NASDAQ:WDAY) was reinstated with a 'Neutral' rating and a $140 price objective by Bank of America, which said the enterprise software company remains a high-quality franchise but faces limited near-term catalysts as growth moderates.

Shares traded at about $124 on Wednesday, down about 42% in the year-to-date.

The bank wrote that Workday continues to benefit from a deeply entrenched position in human capital management, payroll and employee data systems, supported by high switching costs and regulatory requirements.

However, analysts cautioned that investor focus has shifted from the company’s franchise quality toward questions around its ability to reaccelerate growth.

Bank of America highlighted that revenue growth has slowed from roughly 30% several years ago to the low-to-mid teens, with the firm forecasting revenue growth of 11.5% in fiscal 2027 and 11.3% in fiscal 2028. The analysts expect Workday to follow a more normalized, mature software-as-a-service growth trajectory over the coming years.

The firm highlighted three areas shaping the debate around future growth: potential pressure on customer seat counts, increasing competition tied to artificial intelligence, and evolving software pricing models.

While Bank of America sees little risk of Workday being displaced given its core role in enterprise systems, the firm warned that the company could face pressure on its traditional seat-based pricing model as customers rationalize headcount and the industry gradually shifts toward usage- or agent-based pricing structures.

The bank also noted that Workday’s AI-related initiatives, including Illuminate and Sana, represent a strategically important response, though monetization opportunities remain early and may take time to offset pressure on legacy pricing models.

Further, they pointed to several longer-term growth opportunities, including expansion in government, international markets, Workday Student, and Financials cross-selling. However, those initiatives have yet to produce a clear acceleration in growth, while enterprise deal cycles are lengthening and competition in financial software remains elevated.

Bank of America valued the stock at 9 times estimated calendar 2027 enterprise value to free cash flow, describing Workday as a “high-quality but maturing SaaS asset.” The firm added that improved visibility into growth initiatives would likely be needed to support further multiple expansion.