By Sam Boughedda
JPMorgan analysts upgraded monday.com Ltd. (NASDAQ:MNDY) and Box Inc (NYSE:BOX) to Overweight from Neutral in separate notes released Monday morning.
They also raised monday.com's price target to $140 from $130 per share, telling investors the upgrade is based on positive checks, likely near-term catalysts, and solid execution presenting an attractive risk/reward.
The analysts explained that having seen the "relative resiliency in the business in the face of a tough macro backdrop and the solid execution by management over the last two quarters," in addition to the stock coming back closer to its initial entry levels, the firm is now more "comfortable moving to an overweight position."
"We are also encouraged that despite having a relatively higher SMB exposure in a worsening macro environment, the company has not seen a meaningful change in gross churn or downgrades over the last couple of quarters, likely indicating that Monday's value proposition is resonating with customers. Our conviction is further supported by a round of conversations we had with a few industry contacts, who noted continued traction in the market and highlighted Monday consolidating spend from point systems and other work-management vendors, including a 5K seat opportunity in a F500 company, representing roughly a 7x expansion," they added.
Box's price target was raised to $34 from $31 per share, with the analysts stating Box has become the unifying content layer for the enterprise while driving a +20% PF FCF margin.
"While the shares have moved up only slightly since that time, Box has materially outperformed the index (+3% vs. -21% for IGV), and is one of the best performers in our coverage this year," said the analysts. "We think Box has done a really good job in 1) developing a single platform integrated across the entire lifecycle of content, with focused investments in data security, compliance and governance, and 2) integrating heavily across the ecosystem, thus partially diluting the competitive threat by positioning itself as the unifying content layer across the collaboration tools and the applications used within the enterprise."
Box shares jumped more than 7% Monday, while monday.com is up over 5%.