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On Tuesday, UBS analyst Taylor McGinnis adjusted the price target for Asana (NYSE:ASAN) shares to $14 from the previous $18, while keeping a Neutral rating on the stock. The stock, which has declined over 17% year-to-date according to InvestingPro data, currently trades near $12, significantly below its 52-week high of $27.77. McGinnis noted that Asana’s recent financial results have somewhat tempered expectations for accelerated growth, as the company forecasted 9-10% constant currency (C/C) revenue growth for fiscal year 2026. Additionally, the fourth quarter fiscal year 2025 revenue growth of 10.5% C/C was consistent with the growth seen in the past two quarters. InvestingPro data reveals the company maintains impressive gross profit margins of 89.39%, though analysts don’t expect profitability this year.
Asana’s dollar-based net retention rate (DBNR) for the fourth quarter of fiscal year 2025 remained steady at 96%, matching the third quarter of fiscal year 2025. However, the DBNR for customers with an annual contract value (ACV) over $100,000 dropped to 96% from 99% in the previous quarter. This decline raised concerns about the retention of Asana’s largest customers, attributed to a decrease in seats among large tech companies and challenges in upselling.
Despite these concerns, Asana’s guidance for a 5% EBIT margin in fiscal year 2026 exceeded UBS’s estimate of -3%, indicating a significant year-over-year improvement of 1,000 basis points. The company also suggested there is potential for further margin expansion beyond fiscal year 2026. According to InvestingPro, Asana holds more cash than debt on its balance sheet, providing financial flexibility for future growth. Subscribers can access 8 additional ProTips and comprehensive financial analysis in the Pro Research Report.
McGinnis concluded that investors may seek more assurance in near-term growth prospects to adopt a more constructive view on the stock. As Asana’s guidance appears to reflect a realistic growth outlook in the current market conditions, UBS prefers to maintain a cautious stance. The firm’s revised price target reflects this perspective. Based on InvestingPro’s Fair Value analysis, the stock currently appears undervalued despite recent market challenges.
In other recent news, Asana has reported several significant developments that are of interest to investors. The company disclosed a challenging quarter with less-than-expected revenue growth and a decline in its Net Revenue Retention (NRR) rate, though its Remaining Performance Obligations (RPO) saw some acceleration. This comes as Asana’s co-founder and CEO, Dustin Moskovitz, announced plans to step down, transitioning to the role of Chair once a successor is appointed. Analysts have responded to these developments with various adjustments to Asana’s stock price targets. RBC Capital maintained its Underperform rating with a $10 target, reflecting concerns about the company’s growth amidst macroeconomic headwinds. Scotiabank (TSX:BNS) lowered its price target from $18 to $12, maintaining a Sector Perform rating, while Morgan Stanley (NYSE:MS) reduced its target to $15 from $18, keeping an Equalweight rating. BofA Securities cut its price target to $25 from $30 but retained a Buy rating, citing underlying strengths in Asana’s business model. DA Davidson also adjusted its target to $12 from $20, maintaining a Neutral rating, highlighting the company’s margin improvements but expressing caution over its growth outlook. These analyst revisions reflect a recalibration of expectations amid Asana’s leadership transition and the broader challenges in the tech sector.
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