Investors who bought Asana (ASAN) stock early on this year have done very well, and it won’t be wrong to say that some are sitting on huge gains.
Shares of this workflow management software provider have risen more than 258% this year, outperforming the Nasdaq composite index, which is up about 14% on a year-to-date basis, by a considerable margin. (See Asana stock charts on TipRanks)
The stellar growth in Asana stock reflects the rapid rise in its customer base that has accelerated its revenue growth rate. Asana added 7,000 net new paying customers during the last reported quarter, taking the total count to 107,000.
Furthermore, customers spending over $50,000 on an annualized basis more than doubled on a year-over-year basis. Asana highlighted that it is witnessing increased demand and adoption of its products across the globe. Moreover, the momentum in its Enterprise segment continues, reflected through larger deals.
Commenting on customer growth, Asana’s CEO, Dustin Moskovitz, said, “Customers are adopting Asana everywhere.” He added, “We saw particular strength in the enterprise, with the number of customers spending over $50,000 up 111 percent.”
Besides for strong customer growth trends, its retention rate remains high. Therefore, I maintain a Bullish outlook on Asana stock.
In response to the massive growth in Asana’s share price, Robert Oliver of Robert W. Baird said that this is due to its “emergence as a product-led-growth leader in the race to deliver workflow software to enterprises.”
Oliver remains convinced that Asana is “well-positioned to continue its stellar enterprise growth.” He maintained a Buy rating on Asana stock and increased the price target to $110 (6.6% upside potential) from $90.
Oliver’s price target implies an EV/Sales multiple of 36 times his CY22 revenue estimate, representing a premium to the peer group average. However, the analyst stated that Asana’s premium valuation is warranted owing to the “large underpenetrated TAM (total addressable market), scalable margins and FCF (free cash flow).”
It’s worth noting that Asana expects its TAM to reach 50.7 billion by 2025. Moreover, it boasts of “best-in-class” gross margins of over 89%.
Other than Oliver, the majority of the Street maintains a positive outlook on ASAN stock. It has an analyst rating consensus of Strong Buy, based on 9 Buys and 1 Hold. The average Asana price target of $90 implies 12.8% downside potential to current levels.
Meanwhile, TipRanks’ Stock Investors tool indicates that investors who hold portfolios on TipRanks currently have a Very Positive outlook on Asana stock, with 51% of investors who hold portfolios on TipRanks increasing their exposure over the past month.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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