HSBC Downgrades Asana to Reduce on Core Business Pressure

HSBC downgraded Asana (ASAN) to Reduce from Hold with a price target of $10, citing continued pressures in Asana's core technology segment and weakness in its enterprise and middle-market segments. The firm pointed to declining growth, pricing pressure, and sub-100 net revenue retention as indicators of poor performance, which may limit the company's total addressable market and customer return on invested capital.

HSBC has revised its outlook on Asana (ASAN), downgrading its rating from Hold to Reduce and lowering its price target to $10. The financial institution cited continued pressures in Asana's core technology segment and weakness in its enterprise and middle-market segments as reasons for the downgrade [1].

According to HSBC, declining growth, pricing pressure, and sub-100 net revenue retention are indicators of poor performance. These factors may limit Asana's total addressable market and customer return on invested capital. The firm also pointed to a modest ACV downgrade resulting from a significant $100 million-plus contract renewal, which has impacted net retention rates [1].

Analysts have offered varying price targets for Asana, with an average target of $16.40 and a high estimate of $22.00. Despite the recent downgrade, the consensus recommendation from brokerage firms remains at Hold, indicating a neutral stance on Asana's stock [1].

Asana's Q1 fiscal year 2026 earnings report showed strong performance, with non-GAAP profitability achieved for the first time. Revenue grew by 9% year-over-year, reaching $187.3 million, and the company's stock price rose by 3.26% following the announcement [2].

Asana's guidance for the full year projects revenue between $775 million and $790 million, representing growth of 7-9%. The company has raised its non-GAAP operating margin guidance to at least 5.5% and plans to focus on expanding its AI capabilities and enhancing its multi-product approach to drive future growth [2].

Despite the positive earnings report and future growth prospects, macroeconomic pressures and increased buyer scrutiny may impact Asana's sales cycles and customer budgets. The company's international markets also face geopolitical risks and challenges in maintaining competitive differentiation in a rapidly evolving technology landscape [2].

References:
[1] https://www.gurufocus.com/news/2908616/hsbc-downgrades-asana-asan-with-lower-price-target-asan-stock-news
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-asanas-q1-2025-earnings-beat-expectations-stock-rises-93CH-4079286