Today, shares of Asana (NYSE:ASAN) are plunging lower after the company reported its Q4 earnings results. The work management platform posted revenue of $111.9 million, up 64% year-over-year (YOY) and beating estimates of $105.2 million. Meanwhile, earnings per share (EPS) came in at a loss of 25 cents per share, beating estimates of a loss of 28 cents per share. So, if revenue and EPS came in better than expected, why is ASAN stock down so much?
Asana is trading lower because the company announced that it would be investing in itself to boost long-term growth. The company plans on investing capital into its sales team and “focus[ing] on serving large enterprises.” As a result, margins and profitability may be hampered in the near term.
For fiscal year 2023, Asana expects revenue to fall between $527 million to $531 million, which would represent YOY growth of 39% to 40%. However, in terms of operating margin, the company expects to see a loss in the mid-40% range. This is an increase from an operating margin loss of 39% during fiscal year 2022.
On the other hand, CEO Dustin Moskovitz seems to be bullish based on his insider buys. Since last June, Moskovitz has purchased more than 19 million shares of ASAN stock at a cost estimated to be $1.22 billion. However, all of these purchases were pursuant to a prearranged 10b5-1 trading plan.
With the disappointing earnings report in mind, let’s pivot over to see how Wall Street feels about the work management platform.
Wall Street Analysts Weigh In on ASAN Stock Price Predictions
- Berenberg has a price target of $88. Analyst Andrew DeGasperi lowered his price target from $100 after reviewing Q4 results. The analyst added Asana’s “heavy investment” surprised him, although he still remains bullish. Furthermore, DeGasperi believes that Asana has access to a “large unpenetrated market opportunity.” Finally, the analyst believes that Asana will be able to demonstrate operating leverage starting in the second half of this year or the first half of 2023.
- Oppenheimer has a price target of $85. Analyst Ittai Kidron lowered his price target from $100 after reviewing Q4 results. Based on “favorable secular trends and a muted competitive environment,” the analyst is willing to give ASAN stock a premium multiple. In addition, Kidron believes that Asana should pursue large enterprise corporations to drive future growth.
- JPMorgan has a price target of $32. Analyst Mark Murphy believes Asana’s “product differentiation” has helped the company become a leader in “collaborative work management applications.” In addition, the analyst’s price target is based on a roughly 12.5x multiple of enterprise value to expected calendar year 2022 revenue.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
