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BofA raises Asana stock target by 58%, maintains Buy rating on improving fundamentals

EditorAhmed Abdulazez Abdulkadir
Published 12/12/2024, 09:46 PM
ASAN
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On Thursday, BofA Securities expressed a more optimistic stance on Asana (NYSE:ASAN), a work management platform, by raising its price target significantly. The new target is set at $30.00, up from the previous $19.00, while the firm sustained its Buy rating on the company's shares. According to InvestingPro data, the stock has already demonstrated remarkable momentum with a 57% gain in the past week, though technical indicators suggest the stock may be in overbought territory.

The adjustment comes after Asana demonstrated an inflection in its net retention ratio (NRR) during the third quarter, a metric that improved across every cohort. This change suggests a reversal from prior trends where budget constraints and layoffs impacted the number of active user seats. The company maintains impressive gross profit margins of 89.4%, while achieving revenue growth of 11.9% over the last twelve months.

BofA Securities highlighted Asana's positive estimate revision forecasts and a strategic shift towards efficiency as key factors contributing to the revised price target. The company's focus on optimizing sales and marketing (S&M), research and development (R&D), and general and administrative (G&A) expenses has been particularly noted.

Furthermore, the introduction of AI Studio by Asana has yielded promising outcomes, with certain use cases witnessing a doubling in annual recurring revenue. This innovative feature is seen as a significant value driver for the company, enhancing its competitive positioning among growth-oriented software firms.

The appointment of new CFO Sonalee Parekh has also been met with approval. Parekh's proven expertise in expense management is expected to further the company's efficiency initiatives, aligning with Asana's broader strategy to strengthen its financial profile.

Asana's stock price target upgrade reflects a newfound confidence in the company's growth prospects and operational improvements, positioning it favorably in the market for growth software companies.

InvestingPro analysis reveals 12 additional key insights about Asana's financial health and market position. Get access to the comprehensive Pro Research Report, part of InvestingPro's coverage of 1,400+ US stocks, for deeper analysis and actionable investment intelligence.

In other recent news, Asana Inc (NYSE:ASAN). reported a third-quarter revenue of $183.9 million, surpassing expectations and marking a 10% increase year-over-year. The company's loss per share also narrowed to 25 cents from 28 cents in the same period last year. Looking ahead, Asana forecasts fourth-quarter revenue to be between $187.5 million and $188.5 million, slightly above the Bloomberg consensus estimate of $187.9 million.

Analysts from DA Davidson, JMP Securities, and Citi have revised their price targets on Asana, acknowledging the company's strong performance and the positive reception of its new AI Studio product. DA Davidson analyst Lucky Schreiner increased the price target to $20.00 from $13.00, while JMP Securities analyst Patrick Walravens raised the price target to $25.00 from $21.00. Citi analyst Steven Enders also increased the price target on Asana to $16.00 from $13.00.

Furthermore, Asana has provided a forecast for the fiscal year 2025, projecting an adjusted loss per share of 14 to 15 cents, which is more optimistic than the expected loss of 19 cents. Revenue expectations for the year are set at $723.0 million to $724.0 million, surpassing the estimate of $720.2 million.

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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