Asana plunges 22% as J.P. Morgan downgrades, slashes PT on slowing growth
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Asana (NYSE:ASAN) shares plunged in early trading on Thursday after the web and mobile work management company reported fourth-quarter results on Wednesday that prompted J.P. Morgan to downgrade the stock, citing slowing growth and declining margins.
Analyst Mark Murphy lowered his rating to underweight from neutral and cut his price target to $32 from $66, noting that Asana (ASAN) guided fiscal 2023 revenue growth to be between 39% and 40%, down sharply from the 67% it saw in fiscal 2022. In addition, non-GAAP operating margins are expected to be around negative 45%, down from 70%.
"The combination of slower top line with degrading margins may prompt increasing questions about pull-forward, efficiency of spend, and competitive pressures, while investors are pivoting toward some semblance of reasonable near-term [free cash flow] multiples," Murphy wrote in a note to clients.
Asana shares fell sharply in early trading on Thursday, falling slightly more than 22% to $37.60. Over the past six months, Asana shares have fallen 50%.
In addition, Murphy noted that even with the decline in shares, Asana (ASAN) still trades at a 300% premium to its peer group of software companies that have "good growth but a low or negative operating margin." It also trades at a 33% premium to Monday.com (NASDAQ:MNDY), which has faster revenue growth and better margins.
On Wednesday, Asana said it had an adjusted loss of 25 cents per share on $111.9 million in revenue during the fourth-quarter, compared to estimates of a loss of 28 cents per share and $105.18 million in revenue.
For fiscal 2023, Asana said it expects revenue to be between $527 million and $531 million, compared to estimates of $507.15 million. 
Murphy also noted that the space is getting more competitive and even though Asana (ASAN) has "showed strong product vision and established itself as one of the market leaders," other companies, such as Microsoft (NASDAQ:MSFT) are not standing idly by.
Last month, Asana (ASAN) founder & Chief Executive Dustin Moskovitz purchased 1.25 million shares of the company's Class A common stock.