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Monday.com stock target lifted on strong Q1 results

EditorNatashya Angelica
Published 2024-05-15, 12:58 p/m
© Netanel Tobias, monday.com PR

On Monday , Needham raised the stock price target for Monday.com Ltd. (NASDAQ:MNDY (NASDAQ:MNDY)) to $250 from the previous $230 while maintaining a Buy rating on the stock. This adjustment follows the company's announcement of exceptional first-quarter financial performance, which was highlighted by robust adoption trends in the upmarket sector and improved expansion within the small and medium-sized business (SMB) segment.

The company's financial results surpassed prior cautious guidance, with $100k annual recurring revenue (ARR) additions marking a nearly 30% year-over-year increase, totaling 78 in the quarter. Notably, customer relationship management (CRM) and development (DEV) additions reached all-time highs for a quarter, which is seen as a significant and sustainable factor in driving average revenue per account (ARPA) expansion.

Monday.com's free cash flow (FCF) margins were particularly strong, reported at 41% for the first quarter. The company has also revised its FCF margin outlook to 25% for the full fiscal year 2024. The raised guidance exceeds the first quarter's outperformance and reflects increased revenue from the company's pricing increase, indicating that sales trends are surpassing expectations.

Supporting the optimistic view, billings growth was reported at +29.3%, which aligns with the current guidance for 29% revenue growth at the midpoint for the fiscal year 2024. This performance underscores the company's solid financial position and the effectiveness of its growth strategies.

InvestingPro Insights

Following the upbeat financial report from monday.com Ltd. (NASDAQ:MNDY), Needham's revised price target resonates with several positive indicators highlighted by InvestingPro.

The company's strong cash position, with more cash than debt on its balance sheet, and its impressive gross profit margin of nearly 89% in the last twelve months as of Q1 2023, underscore its financial health. Moreover, analysts expect net income to grow this year, supporting the company's forward-looking profitability.

InvestingPro Data reveals a significant revenue growth of over 40% in the last twelve months, which aligns with the company's robust first-quarter performance. Despite not being profitable over the last twelve months, monday.com's liquid assets exceed short-term obligations, which should provide some comfort to investors concerned about short-term financial stability. Moreover, the company is trading at a high Price / Book multiple of 10.94, reflecting its growth prospects and market expectations.

For investors seeking more in-depth analysis, InvestingPro offers additional insights with tips such as the company's high revenue valuation multiple and the prediction that monday.com will be profitable this year. To access these insights and more, consider using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 more InvestingPro Tips available, which could provide further clarity on the investment potential of monday.com.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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