Asana share price forecast after Q1 results

Asana, Inc (NYSE: ASAN) shares have weakened more than 5% after the company reported its first-quarter results that failed to impress analysts who raised concerns over its margin profile and continued cash burn.

JP Morgan lowered its price target on Asana shares

Asana is a web and mobile work management platform designed to help teams organize, track, and manage their work. The platform was built by the San Francisco-based company of the same name founded in 2008 by Dustin Moskovitz (  Facebook’s co-founder) and Justin Rosenstein.

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Asana reported its first-quarter results that failed to impress analysts; total revenue has increased by 57.4% Y/Y to $120.65 million, while the non-GAAP loss per share was -$0.30. Dustin Moskovitz, CEO of Asana, said:

We believe in our long-term strategy and are confident in the fundamentals of our business. We’ll continue to invest strategically in this growth while balancing our commitment to making significant progress toward free cash flow in the coming year.

Cash flow from the operating activity was -$41.1 million compared with -$7.4 million in the prior-year quarter. Free cash flow was also negative and totaled negative -$42.2 million compared with -$7.7 million in the first quarter of last fiscal year.

Asana expects second-quarter revenue to be between $127 million and $128 million, which represents year-over-year growth of more than 40%.

Negative information is that a non-GAAP operating loss should be between $74 million and $72 million, which implies a non-GAAP net loss per share of -$0.39 to -$0.38 vs. a consensus of -$0.32.

Analysts raised concerns over its margin profile and continued cash burn, and according to JP Morgan, shares of Asana are likely to underperform given its relatively high cash burn. JP Morgan lowered its price target on Asana shares to $25 from $32.

Analysts at Oppenheimer lowered their price target to $40 from $60, Piper Sandler lowered its target to $35 from $55, while Baird slashed its target on Asana shares to $31 from $65.

Asana is in a good position to grow its business, but this stock is not undervalued with a $4 billion market capitalization. The company is still not profitable, the book value per share is less than $1, and there are better long-term investment opportunities.

Bears control the price

Asana shares have weakened nearly 70% since February 16, 2022, and according to technical analysis, the bears remain in control of the price action. Falling below $20 supports the continuation of the negative trend, and the next price target could be at $15.

On the other side, if the price jumps above $30, it would signal to trade shares of Asana, and we have the open way to $35.

Summary

Asana reported its first-quarter results on Thursday that failed to impress analysts who raised concerns over continued cash burn. Asana shares have weakened nearly 70% since February 16, 2022, and according to technical analysis, the bears remain in control of the price action.

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