Why Asana Stock was beaten on Thursday

What happened

Asana (ASAN -6.94%) it’s less than a week away from releasing its latest quarterly results, and it looks like experts aren’t expecting a big performance. An analyst launched coverage of the labor platform software developer’s stock on Thursday, and his take didn’t really inspire people to pick up shares. As a result, Asana fell nearly 7% on the day.

So what

This analyst is Citigroupfrom Steven Enders, who before the market opened began his coverage of Asana with a neutral recommendation at a target price of $23 per share.

In his research note, Enders wrote that the company faces significant competition in the work platform space. This will be a challenge to overcome, compared to some peers, Asana has limited cash. At the same time, its costs are high compared to those of competitors.

Such a take adds to investors’ worries about the company’s future. Although it continues to grow revenue at double-digit rates, that growth is expected to slow – in its most recent quarter, it posted a 57% year-over-year gain on revenue. business. However, the company is currently targeting a maximum annual rate of 43% for its entire current fiscal year 2023. And, like many tech startups, Asana regularly posts net losses.

Now what

We’ll see if Enders’ neutral stance is warranted next week, as Asana is expected to report its second quarter fiscal 2023 results on Wednesday, September 7. On average, analysts who follow the stock are not particularly optimistic; they expect the company to post a larger net loss of $0.39 per share, well below the shortfall of $0.23 from the same period last year. A year-over-year comparison of sales estimates was not immediately available.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in the stocks mentioned. The Motley Fool holds roles and endorses Asana, Inc. The Motley Fool has a Disclosure Policy.

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