Michael Funk, an analyst from Bank of America Securities, reiterated the Sell rating on Smartsheet (SMAR – Research Report). The associated price target is $42.00.
Michael Funk has given his Sell rating due to a combination of factors involving Smartsheet’s future revenue prospects and operational challenges. The company’s revenue guidance for FY25 was reported to be below market expectations, particularly citing a downturn in the small and medium-sized business (SMB) sector as a primary concern. Smartsheet’s forecast also indicates a significant slowdown in revenue growth, which is expected to negatively impact investor sentiment. Additionally, management changes, specifically the departure of the Chief Revenue Officer, have introduced further uncertainty regarding the company’s sales execution going forward.
Despite Smartsheet adding new customers and seeing some positive trends in bookings, Michael Funk remains cautious. The lowered revenue outlook, combined with increased competition and ongoing SMB segment weakness, contributes to a more conservative financial outlook for the company. Although Smartsheet’s free cash flow (FCF) estimates have seen a slight uptick, the overall financial picture suggests restrained growth potential. As a result, Funk has adjusted the price objective down to $42, aligning Smartsheet’s valuation more closely with its collaboration software peers, while acknowledging the company’s robust margin profile and revenue exposure are offset by its diminished long-term growth prospects.
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Smartsheet (SMAR) Company Description:
Smartsheet, Inc. engages in the design and development of cloud-based platform for work management. It offers ways for customers to plan and manage their work using grids, projects, cards, and calendars. The company was founded by W. Eric Browne, Maria Colacurcio, John D. Creason, and Brent R. Frei in 2005 and is headquartered in Bellevue, WA.
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