Wolfe Research Downgrades monday.com Ltd. (MNDY) to Peerperform

Wolfe Research analyst Alex Zukin downgraded monday.com Ltd. (NASDAQ: MNDY) from Outperform to Peerperform.

The analyst comments: “2Q marked a step down in net-new growth: sequential customer adds were weakest in 6 quarters, revenue adds of $13M were well below the ~$17M trailing average as pricing benefits fade ($3M in 2Q vs. $7M in 1Q and ~$10M/ quarter last year), NNARR was roughly flat Y/Y (down ~15% ex-AI by our estimate), billings decelerated to +14% Y/Y, and management guided 3Q below consensus (+16.5% vs. +18% Y/Y) while lowering its NRR outlook on slower upgrades and multi-product expansion, implying a CC 4Q exit of ~14% by our math. Weakness continues to be driven by downmarket, and there are no sign of demand environment improving, and at the same time mgmt is calling for potential GTM disruptions, caused by the 20% RIF. There are real positives, especially around AI. AI ARR doubled Q/Q to ~17% of NNARR (traction in Vibe, credits, and agents), upmarket momentum was solid (record 175 $100k+ adds and 15 $500k+ adds), and the 17% operating margin ($14M above guide) shows the RIF profitability tailwind is intact. But with AI monetization not yet large enough to offset core deceleration, we see limited catalysts for the shares to re-rate until net-new growth stabilizes. Evidence of continued AI ARR compounding, stabilization downmarket and sustained enterprise momentum would make us more constructive.

MNDY currently trades at ~1.8x CY27 vs. SMB SaaS Peers and Work Management peers trading at ~2.5x. We see a fair value range of $75 to $115, implying 1.5x CY27E EV/Sales on the lower end and 2.5x on the higher end. We see MNDY currently trading within its FV range and we downgrade shares to Peer Perform.”

For an analyst ratings summary and ratings history on monday.com Ltd. click here. For more ratings news on monday.com Ltd. click here.

Shares of monday.com Ltd. closed at $88.62 yesterday.

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