Monday.com (MNDY) shares soared 130% in the last two years to blow away Tech’s 80%. The company is coming off another blowout quarter and its earnings outlook is soaring as the business software firm expands its reach with larger customers.

Monday.com’s upbeat EPS outlook helps it land a Zacks Rank #1 (Strong Buy). On top of that, MNDY still trades over 40% below its peaks as the Nasdaq and the S&P 500 trade at fresh highs.

MNDY 101

Monday.com’s core work operating system or Work OS is a “low code-no code” platform that helps businesses build work management tools and software applications across various industries. The firm operates in a key growth segment of the economy since every business needs to digitalize their workflows to succeed.

Monday.com has amassed over 225K customers across 200 industries in over 200 countries, most of which are small businesses. MNDY grew its paid customers with over $100K in ARR by 55% in the first quarter, while its net dollar retention rate for customers with more than 10 users reached 114%.

Growth Outlook

Monday.com grew its total Q1 sales by 34% YoY and boosted its adjusted Q1 earnings by 335%. The company also achieved record quarterly free cash flow and provided upbeat guidance. “We are particularly pleased with the rapid growth of monday.com sales CRM and monday dev, which are both now accessible to all customers and saw accelerating account additions in the quarter,” co-founders and co-CEOs, Roy Mann and Eran Zinman said in prepared remarks.

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Image Source: Zacks Investment Research

MNDY is projected to grow its revenue by 29% in 2024 and 27% in 2025 to reach $1.20 billion—after it posted 41% expansion in 2023. Monday.com is expected to expand its adjusted earnings by 24% and 22%, respectively in FY24 and FY25.

Monday.com’s bottom-line outlook came after it swung from a full-year loss of -$0.73 in 2022 to +$1.85 per share in 2023. MNDY’s adjusted EPS outlook has soared over the last year, including a strong post-Q1 release jump to help it land its Zacks Rank #1 (Strong Buy).

Performance and Technical Levels

Monday.com stock has soared 130% in the past two years to easily outpace the Zacks Tech sector’s 80%. MNDY shares have climbed 18% YTD, including some big swings.

MNDY stock ripped back above its 21-day and 50-day moving averages after its impressive Q1 results and guidance.

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Image Source: Zacks Investment Research

MNDY is attempting to find support near its 21-day moving average after a pullback took it from heavily overbought RSI levels to neutral. Monday.com, which went public in the summer of 2021, trades roughly 45% below its 2021 peaks and 18% below its average Zacks price target. 

Bottom Line

Monday.com’s valuation levels are worrisome. But the company is improving its bottom line and remains committed to growth. 

Twelve of the 17 brokerage recommendations that Zacks has for Monday.com are “Strong Buys,” and its balance sheet is robust. Now might be time for investors to consider this growth tech stock trading well below its highs, especially with the Fed set to cut rates this fall. 

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