MNDY - Monday.com rises as Loop Capital calls it 'likely winner' in digital tools market

Israeli-based monday.com ( NASDAQ: MNDY ) rose on Monday as investment firm Loop Capital started coverage on the cloud-based work management company, calling it a "likely winner" in the emerging digital tools market.

Analyst Mark Schappel initiated coverage with a buy rating on monday.com ( MNDY ) and a $175 price target, noting that the company has differentiated its software via its "intuitive" user interface and low to no-cost development framework that allows it to build or modify applications without an IT department. It also has a direct sales force, in addition to its bottoms up customer acquisition approach, that has benefited the company.

"In short, MNDY has built an innovative, simple-to-use platform that supports a seemingly limitless number of use cases, is one of the best-branded vendors in the rapidly growing market for digital teamwork tools and low-code/no-code platforms, goes to market with a beefed-up sales engine, and has a solid financial foundation to drive continued growth," Schappel wrote in a note to clients.

Monday.com ( MNDY ) shares rose more than 3% to $134.59 in early Monday trading.

In addition, Schappel noted that shares now trade at 8 times next-twelve-months revenue, down from 40 when the company went public in June 2021, making its valuation more reasonable and "paving the way for a more valid and sustainable investment case."

The analyst also said that monday.com ( MNDY ) has a "solid" financial foundation, as the company grew revenue 91% year-over-year in 2021 and 75% in its most recent quarter. It also has $835M in cash and investments and is likely to get to 20% operating margins once it reaches scale.

Earlier this month, investment firm Citi said monday.com ( MNDY ) was one of the application software companies with opportunities amid a challenging economy .

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