Citi maintains Buy rating on monday.com with $298 target

On Monday , Citi reaffirmed its positive stance on monday.com Ltd. (NASDAQ:MNDY), upholding a Buy rating and a price target of $298. The company, which InvestingPro rates with a "GREAT" financial health score of 3.04, reported robust financial results for the fourth quarter of 2024, surpassing consensus estimates with a $6.5 million increase in revenue, $10.0 million in EBIT, $6.4 million in billings, and $7.6 million in free cash flow (FCF). With a market capitalization of $12.88 billion, the company appears overvalued according to InvestingPro’s Fair Value analysis. The revenue outperformance marked a 2.5% beat, slightly down from the four-quarter average of 2.6% but up from the 2.0% beat last quarter.

The management at monday.com has provided initial guidance for the fiscal year 2025, projecting revenues to range between $1,208 million and $1,221 million, which is marginally above the consensus of $1,206.1 million. This growth trajectory builds on the company’s impressive 33.9% revenue growth over the last twelve months, supported by an industry-leading gross profit margin of 89.46%. The forecast for EBIT is set at $134 million to $142 million, below the consensus estimate of $148.8 million. Meanwhile, the FCF is anticipated to be between $300 million and $308 million, falling short of the consensus projection of $331.6 million.

For the first quarter of 2025, the company’s revenue guidance is between $274 million and $276 million, aligning with the consensus of $274.0 million. EBIT guidance for the same period is $25 million to $27 million, slightly below the consensus of $27.7 million. The net dollar retention (NDR) rate showed improvement overall, increasing to 112% from 111%. Notably, the NDR for customers spending over $100,000 improved to 116% from 115%. The company also observed an increase in customer additions for contracts worth $50,000 and $100,000, although there was a slowdown in adds for users in groups of 10+ and CRM customers compared to the previous quarter.

Citi’s analysis highlighted several areas of interest for the future, including assumptions in the fiscal year 2025 guidance, potential churn at the lower end of the market, the impact of pricing changes, and the adoption of CRM, development, and service tools, as well as interest in AI technology. For deeper insights into monday.com’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis including 12 additional ProTips and detailed valuation metrics in the Pro Research Report.

In other recent news, monday.com Ltd. has been the subject of various analysts’ adjustments. TD Cowen lowered its price target for the company to $300, maintaining a Buy recommendation. This decision followed an evaluation of the company’s performance, particularly in the EMEA region, which showed a downturn in demand for Project Management solutions. However, the firm noted strong demand in the United States and continued momentum for monday.com’s Customer Relationship Management offerings.

Conversely, Baird raised its price target for the company to $275, maintaining a Neutral rating. The firm anticipates that monday.com may set its initial revenue guidance for 2025 below the market expectation, suggesting a possible revenue growth rate in the low to mid-20s percentage range. Analyst Rob Oliver identified the CRM and IT service management sectors as promising areas for expansion.

Scotiabank (TSX:BNS) reiterated an Outperform rating on the company’s shares despite a 19% share fall, adjusting the price target to $300. Analyst Allan Verkhovski cited the introduction of new services, continued upmarket progress, and the company’s operation at the Rule of 50 as reasons for optimism.

In the company’s recent earnings call, monday.com reported Q3 2024 revenue of $251 million and net income of $45 million, surpassing forecasts. Despite these robust financial results, the company’s stock experienced a notable decline. These are some of the recent developments surrounding monday.com Ltd.

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