Monday.com stock reiterated as Buy by Needham despite Google marketing impact

Investing.com - Needham analyst Scott Berg reiterated a Buy rating and $250.00 price target on monday.com Ltd. (NASDAQ:MNDY), currently trading at $175.74, following a post-third quarter investor call with the company’s investor relations team. According to InvestingPro data, the stock is trading near its 52-week low of $171.54, while analysts maintain a strong buy consensus with targets ranging from $215 to $450.

The analyst noted that during the call with Monday ’s VP of IR Byron Stephen and IR Manager Paige Newman, Needham gained additional clarity on the third-quarter performance marketing shortfall and how the company’s reliance on Google (NASDAQ:GOOGL) should further diminish moving forward.

Berg believes the Google pricing change will have a small but minor near-term impact, which may force monday.com to reduce its mid-term growth target from 30% to 25% at its September investor day.

The company has already decreased its dependence on Google, which now represents less than 30% of net customer additions, while self-service sales have decreased to 40% of total sales, highlighting the company’s shift toward larger, higher-quality deals in upmarket segments.

Other key topics discussed during the investor call included AI monetization, a $300 million CRM ARR target, NRR stabilization, and confidence in accelerating fourth-quarter growth, with Berg concluding that the recent large share decline seems overdone for what amounts to a five-point change in growth assumptions. The stock has fallen over 45% in the past six months, and InvestingPro analysis indicates it’s currently trading in oversold territory, with 11 analysts recently revising their earnings estimates upward.

In other recent news, monday.com reported mixed second-quarter results, with revenue growth of 27%, which exceeded expectations by 1.8% but fell short of the average beat of 2.5%. Wolfe Research highlighted strengths in upmarket segments and customer relationship management, although the company faced challenges in downmarket areas due to changes in Google’s algorithm and shifting search trends. Despite these challenges, Morgan Stanley (NYSE:MS) upgraded monday.com to an Overweight rating, citing the company’s strategic shift towards a multi-product approach and a sales-led growth model.

Several firms adjusted their price targets for monday.com. TD Cowen lowered its target to $290, while maintaining a Buy rating, and Piper Sandler set a new target of $300, describing the recent stock sell-off as "overdone." JPMorgan also revised its price target to $285, keeping a Neutral rating on the stock. Wolfe Research set its price target at $220, maintaining an Outperform rating. These developments reflect a cautious yet optimistic view from analysts on monday.com’s future performance.

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