RBC Capital Downgrades Asana On Challenging Macro, Cash Burn Concerns

Author: Anusuya Lahiri | July 19, 2022 11:56am

• RBC Capital analyst Rishi Jaluria downgrades Asana, Inc (NYSE:ASAN) to Underperform from Sector Perform with a price target of $13 (23% downside), down from $21.
• Jaluria views Asana's software as discretionary and, therefore, recession-prone.
• He determines that project management is not a large TAM. He thinks the market is intensely competitive, with multiple pure-plays and several solutions that were part of broader software platforms.
• Asana faces competition from more prominent vendors that have acquired into the space, including Adobe Inc (NASDAQ:ADBE) (Workfront), Citrix Systems, Inc (NASDAQ:CTXS) (Wrike), and, most notably, Atlassian Corp Plc (NASDAQ:TEAM) (Trello).
• He views Asana's cash burn as problematic and the timeline to profitability as unclear. 
• He notes Asana's huge dependence on advertising, which is 30%+ of total sales and marketing spend. 
• Price Action: ASAN shares traded lower by 3.93% at $16.88 on the last check Tuesday.

Posted In: ADBE ASAN CTXS TEAM