On Wednesday, KeyBanc Capital Markets initiated coverage on shares of Asana (NYSE:ASAN), assigning an Underweight rating to the work management platform, with a price target of $14.00. The firm highlighted several factors affecting Asana, including a series of internal changes and external market challenges.
The company is currently undergoing significant transitions, such as introducing a new pricing and packaging model, incorporating AI features into its product, and revamping its go-to-market strategy. Additionally, Asana faces a weak labor market in its key end-market and rising competition from both specialized competitors and larger enterprise vendors.
KeyBanc pointed out that Asana is on a rapid path to achieving cash flow breakeven. However, the analyst expressed concern over the market's expectations for the company's future growth, particularly in the fiscal years ahead. After a period of tempering expectations for fiscal year 2025, which is aligned with calendar 2024, the company's fourth-quarter call indicated an anticipated growth rate of approximately 10.5%.
Despite this conservative outlook, consensus forecasts suggest a significant uptick in growth rates for the subsequent years, with 15.1% growth expected in fiscal year 2026 and an acceleration to 20.5% growth in fiscal year 2027. This optimistic scenario would imply an addition of roughly $170 million in incremental revenue, surpassing the growth achieved during the peak period of 2021.
KeyBanc acknowledged the potential for growth acceleration as the fiscal year progresses but expressed reservations about the extent of execution and efficiency improvements anticipated by the market. The firm's position reflects caution amidst Asana's ambitious plans and the optimistic growth trajectory expected by analysts and investors.
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