Updated Aug 13 at 5:02pm ET.
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Morgan Stanley downgraded the stock to underweight, a rating that suggests they expect it to perform worse than other companies in the same sector. The firm set a price target of 9 dollars, which is about 20 percent lower than where the stock is trading today.
This move highlights the pressure on the company to prove it can grow faster. While it is a critical tool for many engineering teams, analysts are questioning if the current price is justified while growth remains in the single digits.
Alex Shootman joined the board of directors as Elena Gomez stepped down to focus on her role at Toast. Shootman brings over 25 years of experience running enterprise software companies, which could help as the company tries to sell more expensive, complex tools to large businesses.
Separately, the company hired Arnaud Lagarde to lead its business in Europe, the Middle East, and Africa. Expanding in these regions is a key part of the plan to get revenue growth back into double digits after it slowed to about 5 percent recently.
Source: 8-K filing
Analysts have turned more cautious recently, capped by a downgrade from Morgan Stanley in late July. Only 7 of 23 analysts recommend buying, and the average price target of $9 sits 26% below the current stock price.
Management has a perfect record of beating their own profit targets over the last two years. They consistently set a bar they know they can clear.
| Expectation | |
|---|---|
| EPS | $0.30 |
| Revenue | $123M |
