MNDY Rallying Into Earnings After Recent Stock Underperformance

Monday.com's stock price (NASDAQ: MNDY) is trading substantially higher into this morning's earnings, up 6.95% after what has been a difficult year for holders. The company is set to announce its second-quarter 2025 financial results before the market opens today, with the stock having dropped 4.25% over the past 12 months.

Analysts project that Monday.com will report earnings per share (EPS) of $0.86 for the current quarter ending June 2025, a slight decrease from $0.94 in the same quarter last year. However, revenue is expected to show strong growth, with an average estimate of $293.58 million, up 24.34% from $236.11 million a year ago. This suggests analysts anticipate robust top-line expansion, though potentially moderated profitability year-over-year.

Price Targets

This performance contrasts with the generally positive sentiment surrounding the company, fueled by its strong Q1 results and optimistic full-year projections. The stock's 50-day and 200-day simple moving averages (SMA) of $277.73 and $280.00, respectively, further highlight the recent underperformance relative to its longer-term trends.

Looking ahead, Monday.com has provided ambitious guidance for the full fiscal year 2025, projecting total revenue between $1.208 billion and $1.221 billion, which translates to a year-over-year growth of 24% to 26%. The company also anticipates a non-GAAP operating income ranging from $134 million to $142 million, with an operating margin of 11% to 12%. Furthermore, free cash flow is expected to be between $300 million and $308 million, with a free cash flow margin of approximately 25%.

Despite the positive outlook, the stock's recent struggles raise concerns. The anticipated Q2 EPS of $0.84 represents a decrease from the previous quarter's $1.10, which could be weighing on market sentiment. Whether this projected dip in EPS is already factored into the current stock price remains a key question.

While the prevailing narrative paints a picture of continued growth and profitability for Monday.com, a more cautious perspective is warranted. Yes, the company has demonstrated impressive revenue growth, but at what cost? The focus on acquiring new customers and expanding market share may be masking underlying inefficiencies and unsustainable spending.

The projected decrease in EPS for Q2, even if temporary, could be a sign that the company's growth is becoming more expensive. Moreover, the lofty full-year projections may be overly optimistic, especially considering the uncertain economic climate and increasing competition in the work management software space.

The market's reaction to the earnings release will ultimately decide whether Monday.com can maintain its growth trajectory and live up to its potential. The high average price target of $351.67 suggests analysts still believe in the long-term potential, but the company needs to deliver strong results to validate that optimism.