Investing.com - Needham has lowered its price target on monday.com Ltd. (NASDAQ:MNDY) to $125.00 from $250.00 while maintaining a Buy rating on the stock. This aligns with the broader analyst consensus, which remains bullish on the company despite recent challenges.
The price target reduction follows monday.com's fourth-quarter financial results, which were largely in line with expectations, but accompanied by disappointing guidance for fiscal year 2026. The company's shares fell approximately 20% on the day of the announcement, adding to a steep 62% decline over the past year. According to InvestingPro data, the stock is now trading near its 52-week low with an RSI indicating oversold territory.
Monday.com's initial FY26 revenue growth guidance of 18.5% came in about 3 percentage points below consensus estimates. Needham attributed this shortfall to inconsistency in the company's downmarket no-touch sales approach. This represents a slowdown from the company's impressive 28.6% revenue growth in the last twelve months.
The company's profitability and free cash flow projections were also lower than expected, which Needham linked to the sudden strong appreciation of the Israeli Shekel. Approximately 55% of monday.com's costs are located in Israel, making the company sensitive to currency fluctuations. Despite these challenges, the company maintains exceptional gross profit margins of 89.2%.
Due to lack of visibility in downmarket sales, monday.com has withdrawn its FY27 financial targets, suggesting revenue growth will remain below 20% for that period. Needham noted that the company's upmarket sales remain robust, indicating that the FY26 guidance is likely de-risked at current levels. With a PEG ratio of 0.31, InvestingPro analysis suggests the stock is undervalued relative to its growth prospects.
In other recent news, monday.com Ltd has experienced several adjustments in analyst price targets due to varying challenges and expectations. Oppenheimer lowered its price target for the company to $130, citing a softer outlook from the fourth-quarter 2025 results and guidance, which fell below expectations. The firm highlighted issues such as difficulties in acquiring low-end customers and a slow transition to upmarket segments. Similarly, DA Davidson reduced its price target to $150, attributing the change to longer sales cycles that are affecting the company's fiscal year 2026 estimates.
Canaccord Genuity also adjusted its price target to $190, maintaining a Buy rating, with expectations that monday.com will need to lower its growth guidance for 2026. Meanwhile, Cantor Fitzgerald decreased its price target to $148, pointing out mixed results in the company's upmarket expansion efforts, specifically noting challenges in the Service offerings due to competition. Despite these adjustments, some firms like DA Davidson and Canaccord Genuity continue to hold a positive outlook with Buy ratings. Investors are advised to consider these recent developments and the potential impact on monday.com's future performance.