Lunes.com (NASDAQ: MNDY) shares jumped on Thursday after investment firm DA Davidson upgraded the software provider to buy, with company criticism It’s “okay” with an investment tradeoff now for growth down the line.
Analyst Robert Simmons upgraded the stock to buy, but lowered the target price to $ 170 from $ 275, noting that monday.com generated positive free cash flow “ahead of schedule” and the guidance of company in 2022 will be a “mix of good profits and worse margins.”
“The company is releasing new products, strengthening the top of its funnel, and expanding its go-to-market, giving us confidence in the long-term sustainability of growth,” Simmons wrote in the note to clients.
shares of Monday.com increased more than 8% to $ 139.10a day after reaching a new 52-week low.
Several other workforce application stocks also rose on Thursday, including Intuit (NASDAQ: INTU)Salesforce.com (NYSE: CRM)Service Today (NYSE: NOW)Paycom Software (NYSE: PAYC) and others get about 2%.
On Wednesday, software provider led by Roy Mann said it generated $ 95.5M in revenue during the period, but it lost an adjusted 26 cents per share. Analysts expect the company to generate $ 87.8M in revenue, while losing an adjusted 52 cents per share.
Monday.com said it expects revenue to be $ 100M-102M in the first quarter, with non-GAAP operating losses between $ 47M-45M. Analysts expect the company to forecast $ 94.09M in sales for the first quarter. For 2022, monday.com said it expects revenue to be between $ 470M-475M, with a non-GAAP operating loss between $ 147M-142M.
In addition, Simmons said that although the margin guidance for 2022 is lower than for 2021, the company is leaning towards growth and because of strong unit economics, the company is okay with this decision.
“We believe the guidance is conservative, both in growth and margin, and see multiple drivers of long -term performance that are either out of numbers or virtually none of them at this time,” Simmons added. “With the stock losing ~ 70% from its 52-week high, and what we see as an overreaction to very good results and guidance alone, we are now rated to BUY.”
Earlier this month, monday.com’s shares fell sharply after the company aired its first Super Bowl ad, titled “Work Without Limits.”