On Friday, KeyBanc Capital Markets adjusted its outlook on Smartsheet Inc . (NYSE:SMAR), a leading cloud-based platform for work execution, by reducing its shares target to $51 from the previous $53. The firm, however, has maintained its Overweight rating on the company's shares.
The revision follows Smartsheet's fourth-quarter earnings report, which revealed a slight increase in revenue and solid operating margin (OM) results. Despite these positive aspects, the company experienced a worsening macroeconomic environment, particularly within the small and medium-sized business (SMB) segment, during the quarter.
For the fiscal year 2025, Smartsheet anticipates that the challenging macroeconomic conditions, changes in sales leadership, and adjustments to its go-to-market strategy will create headwinds for revenue growth. Consequently, the company has set a lower revenue growth forecast of 16-17%, compared to the consensus estimate of 19.5%.
Nevertheless, Smartsheet's full-year operating margin guidance of 12-13% is more optimistic than the Street's expectation of 10.5%. Despite the moderated near-term revenue growth outlook, KeyBanc remains positive about Smartsheet's ongoing improvements in profitability.
The firm's stance reflects confidence in Smartsheet's ability to navigate through the current economic challenges while continuing to enhance its profitability metrics, which is a key factor in maintaining the Overweight rating despite the revised price target.
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