Dmitry Vinogradov
HSBC downgraded Asana (NYSE:ASAN) on Wednesday to Reduce from Hold and cut the price target on the stock to $10 from $13.
Analysts led by Stephen Bersey said they have cut their fiscal 2026-29 revenue estimates for Asana by 2-5%. The analysts added that the company’s revenue growth decelerated to 8.6% year-over-year in the first quarter of fiscal 2026 (in the fourth quarter of fiscal 2025 it was 10%), and fiscal year 2026 guidance suggests further deceleration to about 8% year-over-year (7.5%, excluding foreign exchange, or FX).
The analysts added that Asana’s management comments during the call pointed to continued pressures in the core technology segment and weakness in enterprise and middle-market segments.
Dollar-based net revenue retention rate dipped to 95% in the first quarter of fiscal 2026 (in the fourth quarter of fiscal 2025 it was 96%) and management expects further decline in the fiscal second quarter, the analysts added.
Bersey and his team said that the company reported good traction for its AI Studio offering, but reached an annual recurring revenue rate of $1M, which is too small to move the needle.
The analysts believe declining growth, pricing pressure, and sub-100 net revenue retention points to continued poor performance and indicates that the company’s total addressable market, or TAM, and customer Return on Invested Capital, or ROIC, may be more limited than management had previously expected. This is concerning given the relatively low revenue base, the analysts added.
Shares of Asana fell about 20% on Wednesday. The stock was largely flat premarket on Thursday.