Monday.com Stock Dip Is Reason to Buy—Analyst

Monday. com stock tumbled Monday. Its website on a phone screen. (Dreamstime)

Monday.com’s stock drop makes the company an attractive buying opportunity, according to Morgan Stanley.

On Monday, the project management software company’s shares dropped nearly 30% after it provided a disappointing revenue forecast for the current quarter and said it saw negative trends in web traffic after Google made changes on its search result algorithm.

The following day analyst Josh Baer raised his rating for Monday.com to Overweight from Equal-Weight and lowered his price target to $260 from $330.

“Focus on paid search commentary drove shares meaningfully lower, creating the entry point for which we’ve been waiting,” he wrote. It’s an “attractive entry point for work management leader, with strong execution, well positioned to penetrate multi-product and upmarket opportunity.”

In early trading Tuesday, Monday.com stock was up 2.4% to $178.26.

The analyst predicts the company will be able to effectively deal with artificial intelligence’s impact on search advertising by focusing more on higher-end customers and by using other marketing channels.

“Our fundamental view has not meaningfully changed,” he wrote. “The concerns are overblown, in our opinion, given only modest top of funnel impact to smaller customers and monday.com’s increasingly diverse growth vectors.”

Write to Tae Kim at tae.kim@barrons.com