On Friday, BofA Securities revised its stock price target for Smartsheet (NYSE:SMAR), a work management platform, reducing it to $42.00 from the previous $45.00. The firm maintained its Underperform rating on the stock.
The adjustment follows Smartsheet's release of its fiscal year 2025 revenue guidance, which did not meet investor expectations. The guidance was 2% below the consensus of Wall Street analysts and 1% below BofA's own projections.
The company cited a weakening in the small and medium-sized business (SMB) segment as the primary reason for the lower-than-expected guidance. According to management, the pressure in the SMB sector intensified in the fourth quarter compared to the third quarter and continued to deteriorate into the first quarter of 2025.
Smartsheet's guidance indicates a significant slowdown in revenue growth, with the mid-point of the fiscal year 2025 revenue guidance suggesting an 8.5 percentage point deceleration from fiscal year 2024. Moreover, the company's forecast for approximately 200 basis points of adjusted operating margin (Adj OpM) expansion during the year may fall short of bullish investors' hopes.
Compounding these challenges is the recent departure of Smartsheet's Chief Revenue Officer, Michael Arntz, which BofA believes could add to the company's execution risk.
Despite these concerns, there was a positive note in the company's report: Smartsheet added 500 new paying customers through its Free plan in January, and improvements in Capabilities bookings were driven by self-discovery.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.