Morgan Stanley maintains buy rating on monday.com after Q2 report

Morgan Stanley maintains buy rating on monday.com after Q2 report

Morgan Stanley has maintained its buy rating on monday.com Ltd. (NASDAQ: MNDY) despite the recent drop in the stock price following the company's fiscal second quarter (Q2) 2025 results. The investment bank's analyst, Josh Baer, retained the price target of $260, indicating confidence in the company's long-term growth prospects.

In the Q2 report, monday.com Ltd. reported revenue of $299.01 million, exceeding Wall Street estimates by $5.43 million, and earnings per share (EPS) of $1.09, surpassing expectations by $0.23. Despite these positive results, the stock price has fallen by more than 29% since the announcement, primarily due to challenges related to AI search changes.

Historical data suggests that following earnings beats, MNDY has demonstrated a 50% win rate over three days, an 83.33% win rate over 10 days, and a 66.67% win rate over 30 days. These figures highlight a statistically favorable trend for short- to medium-term gains after positive earnings surprises, with the maximum return during the backtest period reaching 9.36% over 30 days. Such patterns reinforce the potential for recovery if the recent AI-related challenges prove temporary.

Baer acknowledged the recent stock decline but views it as an opportunity to invest at a lower price. He highlighted that analysts are debating the company's ability to maintain growth rates above 20%. After discussions with investors and the company's investor relations team, Baer remains optimistic about the temporary nature of the AI search challenges. He believes monday.com Ltd. has the potential to expand its market reach through its product offerings.

Baer also noted that the stock is currently cheaper than many competitors, presenting an attractive entry point for investors. While monday.com Ltd. offers growth potential, Baer emphasized that certain AI stocks may offer greater upside potential and carry less downside risk.

References:
[1] https://finance.yahoo.com/news/morgan-stanley-maintains-buy-monday-034946680.html