RBC Capital Downgrades Asana On Challenging Macro, Cash Burn Concerns

  • RBC Capital analyst Rishi Jaluria downgrades Asana, Inc ASAN to Underperform from Sector Perform with a price target of $13 (23% downside), down from $21.
  • Jaluria views Asana's software as discretionary and, therefore, recession-prone.
  • He determines that project management is not a large TAM. He thinks the market is intensely competitive, with multiple pure-plays and several solutions that were part of broader software platforms.
  • Asana faces competition from more prominent vendors that have acquired into the space, including Adobe Inc ADBE (Workfront), Citrix Systems, Inc CTXS (Wrike), and, most notably, Atlassian Corp Plc TEAM (Trello).
  • He views Asana's cash burn as problematic and the timeline to profitability as unclear. 
  • He notes Asana's huge dependence on advertising, which is 30%+ of total sales and marketing spend. 
  • Price Action: ASAN shares traded lower by 3.93% at $16.88 on the last check Tuesday.
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