© Shutterstock monday.com (MNDY) Positioning for solid revenue growth – BofA
upon Monday , Bank of America initiated coverage on monday.com Ltd. (MNDY (NASDAQ:)), a prominent player in the collaboration software market, with a Buy rating and $280 price target. The company highlighted its strong positioning to grow its revenue at a compound annual growth rate (CAGR) of 30% through fiscal 2026. The optimism for the stock is based on several factors, including the likelihood that monday.com will beat consensus estimates. , continue to gain market share, deliver value at current prices relative to peers, and leverage expansion into enterprise markets and new product launches to drive long-term growth.
Bank of America expects monday.com to achieve Rule of 55 status in 2024, where the sum of its revenue growth and free cash flow (FCF) margin exceeds 55. The company's fiscal 2024 revenue and FCF expectations are 3% and 15%. % above consensus. This outlook is based on the expectation that the market is underestimating the company's near-term growth opportunities. Despite trading at a 37% discount to the 50-company software industry rule on an enterprise value to estimated earnings (EV/C25Erev) basis for calendar year 2025, the company is trading at a We view the recent decline in stock prices as an opportunity. buy.
Analyst analysis and Gartner vendor ratings show that monday.com's platform is well-equipped to continue gaining market share in the highly competitive and fragmented Collaborative Work Management (CWM) market. I am. The company received the highest average product score among its 10 competitors from Gartner. This score is based on his 7 usage examples. With platform scalability improvements on the horizon, analysts expect enterprise adoption to significantly increase, resulting in higher average revenue per user (ARPU), seat expansion, user retention, profitability, and market efficiency. I'm predicting it.
Bank of America's target price for monday.com is derived from the company's 10.7x estimated 2025 enterprise value/earnings, which represents a premium compared to its high-growth software and collaboration software peer group. It has become. However, the company says this premium valuation is justified by monday.com's strong growth and profit expansion potential.
