Analysts on Wall Street Lower Ratings for These 5 Stocks

03. monday.com Ltd. (NASDAQ:MNDY)

Price Reaction after the Downgrade: -13.95 (-6.47%) 

On April 10, Citi made significant adjustments to its assessment of monday.com Ltd. (NASDAQ:MNDY) stock, downgrading it from Buy to Neutral while simultaneously reducing the price target from $277 to $250. This decision triggered a substantial price reaction, with monday.com Ltd. (NASDAQ:MNDY) shares declining by 6.47% as of midday on April 10. The rationale behind the downgrade stems from observations of slowing demand and a less pronounced impact from recent price increases, posing risks to the near-term outlook. This contrasts with the backdrop of high investor sentiment and valuation. While acknowledging monday.com Ltd. (NASDAQ:MNDY) strong position in terms of new product expansion, go-to-market efficiency, and spend consolidation, especially in the medium to long term, Citi expresses caution regarding investor expectations for the influence of price increases on calendar year 2024 growth. The firm believes that these expectations may be overly optimistic in the near term, prompting a view of a more balanced risk-reward at a premium valuation, thus justifying the downgrade to Neutral. Citi’s analysis is informed by recent partner conversations and web traffic analysis, revealing a deceleration in demand, extended deal cycles, and increased resistance to the company’s recent price hikes. Additionally, web traffic data indicates a slowdown in user growth, which Citi believes is not currently reflected in the stock’s valuation. Despite monday.com Ltd. (NASDAQ:MNDY) strong performance over the past year, outperforming its industry by 21 points as of April 9, 2024, and trading near the top end of its two-year range on enterprise value/revenue, Citi anticipates incremental risk to the company’s results in the near term. Looking ahead, Citi expects that monday.com Ltd. (NASDAQ:MNDY) first-quarter 2024 earnings report, anticipated in early May, will likely reveal lower results or guidance than what investors are currently expecting, primarily due to the identified slowdown in demand and user growth.