MNDY - DA Davidson downgrades monday.com ahead of Q4 results

Investment firm D.A. Davidson downgraded cloud computing company monday.com ( NASDAQ: MNDY ) ahead of its fourth-quarter results next week, citing worries over the magnitude of the results.

"Our analysis of 3rd party data points to a smaller beat than usual, and competitor commentary/results point in a similar direction," analyst Robert Simmons wrote in a note to clients, specifically calling out results from Atlassian ( TEAM ).

Simmons lowered his rating on Israeli-based monday.com ( MNDY ) to neutral and lowered estimates for the fourth-quarter and next two years.

Monday.com ( MNDY ) shares fell nearly 3% in premarket trading on Friday.

The analyst pointed out that revenue "beats" compared to guidance have slipped over the past five quarters: 11.4%, 9.2%, 7.4%, 4.8% and 4.9% and with continued foreign exchange headwinds likely a factor, it's possible the beat could be even smaller this time around.

A consensus of analysts expect monday.com to lose an adjusted 38 cents per share on $141.28M in revenue.

Looking to the first-quarter, Simmons believes monday.com ( MNDY ) management will err on the cautious side, but it's possible that foreign exchange could be a tailwind and help guidance come in around $152.3M, or slightly above consensus.

Last month, Citi named monday.com ( MNDY ) as one of its top application software stocks for 2023, despite the slowing macro environment .

Analysts are overwhelmingly positive on monday.com ( MNDY ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a STRONG BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates MNDY a STRONG BUY .

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