Wall Street analysts released their recommendations Monday for Asana Inc ASAN, the cloud-based platform for team collaboration and work management that went public in late September.
The Asana Analysts
KeyBanc Capital Markets analyst Alex Kurtz initiated coverage of Asana with a Sector Weight rating.
JMP Securities analyst Patrick Walravens initiated coverage of Asana with a Market Outperform rating and $31 price target.
Piper Sandler analyst Brent Bracelin initiated coverage of Asana with a Neutral rating and $25 price target.
Morgan Stanley analyst Stan Zlotsky initiated coverage of Asana with an Equal-weight rating and $27 price target.
KeyBanc On Asana's 'Differentiated Platform'
Asana sells collaborative work management platforms that cater to work teams that suffer from a lack of day-to-day tasks and goals, Braceline said in an initiation note.
Asana solves this problem by offering a cross-departmental workflow that helps lower the amount of time employees spend on organizing work, the analyst said.
Workers allocate 60% of their time towards organizing work, 13% on formulating a strategy and the remaining 27% on the actual work, according to a McKinsey study, he said.
Asana itself found that a large Fortune 500 client saw its workers save 90 minutes a day by eliminating unproductive meetings, Braceline said.
The company is well-positioned to address a CWM market that will grow from $23 billion in 2020 to $32 billion in 2023, the analyst said.
In the meantime, Asana's elevated investments in growing the business are "depressing key operating metrics," according to KeyBanc.
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JMP: 6 Reasons To Like Asana
The bullish case for Asana's stock is based on six key points, Walravens said in an initiation note.
- Dustin Moskovitz co-founded Facebook in 2004 and is credited with scaling the social media company as its CTO. As CEO of Asana, he brings the necessary experience to the table, the analyst said.
- Asana offers an "inspiring mission" to help work teams of all shapes and sizes to become more efficient and effective, he said.
- The company has shown investors impressive growth, including 86% revenue growth in 2020, Walravens said.
- A satisfied user base consisting of 82,000 customers and 1.3 million paid users.
- The market size for collaborative applications and project management market could grow at an 11.6% compounded annual growth rate through 2023, the analyst said.
- The dollar-based net retention rate among customers that spend over $50,000 was more than 140% in the second fiscal quarter, according to JMP.
Piper Sandler: Asana Created Out Of Necessity
Asana was created by ex-Facebook executives in 2008 to better coordinate and solve unique challenges posted by digital work, Bracelin said in an initiation note.
To date, the company's penetration rate among 1.25 billion-plus workers is less than 1%, so the company has a large potential for growth, the analyst said.
The stock's valuation at 16.6 times EV/S on 2021 estimates is a "reasonable premium" compared to similar cloud software companies, according to Piper Sandler.
Morgan Stanley Sees Better Opportunities Than Asana
Instead of buying Asana's stock, Morgan Stanley recommends buying Smartsheet Inc's SMAR stock, Zlotsky said in a note. The two companies have direct exposure to the workflow management and collaboration segment, but Smartsheet is more durable amid the COVID-19 pandemic and better-positioned for growth as the macro environment improves, the analyst said.
Smartsheet also offers superior financial metrics, he said.
The company should show operating margins of 17% and free cash flow margins of 9% versus Asana at 65% and 49%, respectively, Zlotsky said.
Smartsheet's higher net revenue retention of 134% versus Asana's 120% offers the potential for a superior, profitable revenue stream, the analyst said.
Finally, Smarthseet offers a broader platform for workflow management with a no-code mobile and desktop application development, according to Morgan Stanley.
ASAN Price Action
Asana shares were trading 3.19% higher at $24.25 at last check Monday.
Photo courtesy of Asana.
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