JPMorgan cuts Monday.com to Neutral on slowing growth

Investing.com -- JPMorgan has cut Monday.com (NASDAQ: MNDY) to Neutral from Overweight on Tuesday, saying the work management software company is struggling to attract new customers.

The bank set a December 2027 price target of $87, replacing its previous December 2026 target of $90. The stock closed at $79.05 on Monday, down 5.5%, while it is down 2.6% premarket today.

Analyst Samik Chatterjee said the decline in new annual recurring revenue shows the difficulty of sustaining the company's previously strong growth. He expects those pressures to continue, in part because of disruption from a 20% workforce reduction in July.

Net dollar retention, which measures spending changes among existing customers, slipped to 109% in the second quarter from 110% in the first. However, the analyst highlighted that growth was stronger among customers spending more than $100,000, suggesting weakness is concentrated among newer customers.

Chatterjee said partner checks point to longer sales cycles among small and mid-sized businesses, with customers evaluating products from frontier AI model developers and taking longer to commit to spending.

AI products made up 17% of new annual recurring revenue in the second quarter. Even so, that was less than 1% of total recurring revenue. Chatterjee said "AI contribution is unlikely to move the needle on total company financials until it emerges to be a material driver for net-new ARR."

Furthermore, JPMorgan said the low valuation is unlikely to attract investors on its own, given that more than 85% of recurring revenue still comes from work management and more than 55% from customers spending less than $50,000.

The bank wants to see "a discernible change in down-market momentum" before turning more positive.

Original Article

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