On Thursday, Scotiabank (TSX:BNS) analyst Allan Verkhovski adjusted the price target for monday.com Ltd. (NASDAQ:MNDY (NASDAQ:MNDY)) to $300 from the previous $325, while maintaining a Sector Outperform rating on the company's shares.
The analysts noted that since the Nasdaq conference on December 10, 2024, monday.com's stock has declined by 19%, compared to an 8% drop in the IGV. They pointed to signs of weakening international demand in November as a reason for the adjustment to the lower price target.
The firm's analysts revised the bull case FY25 revenue growth estimate from 32% to 29%, which is 23% excluding pricing adjustments.
Additionally, the base case FY25 revenue projection was reduced to $1.210 billion, marking a 25% year-over-year increase but still falling short of the consensus estimates of $1.222 billion, which would represent a 27% year-over-year growth.
This reassessment comes in the wake of a relatively weaker Q3 for monday.com, the departure of Chief Revenue Officer Yoni Osherov at the end of Q4, and signals from management that significant investments in the following year may pressure the bottom line.
The analysts said "we remain optimistic about shares in 2025, with the introduction of service, continued progress moving upmarket, and MNDY operating at the Rule of 50 while achieving over 20% organic top-line growth."
The elaborated that "At 30x CY26E EV/FCF and 7.5x CY26E EV/Sales “ a 2-turn discount to its CY25E peers growing revenue >20% “ we see MNDY™s current valuation as an attractive buying opportunity for investors with duration. Any potential weakness following the Q4 print could offer an even more compelling entry point."
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