Key Stats for Asana Stock
- 1- Year Price Change for Asana stock: -41%
- $Asana Share Price as of Jan. 15: $11.51
- 52-Week High: $24.50
- $Asana Share Price Target: $15.92
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What Happened?
Citi just upgraded Asana (ASAN) stock to “buy” from “neutral”, setting a $16 price target that implies 40% upside from current levels.
- Analyst Steven Enders sees Asana hitting an inflection point thanks to new leadership and the rollout of AI-powered workflow tools that are gaining real traction with enterprise customers.
- The upgrade comes right after Asana reported a solid third quarter that beat revenue expectations and delivered record operating margins.
- The company grew revenue 9% year-over-year to roughly $180 million and posted an 8% operating margin, up 12 percentage points from a year ago.
More importantly, CFO Sonalee Parekh said for the first time that net revenue retention has stabilized and is now “at or near the bottom,” marking a critical turning point after several quarters of pressure from tech sector downsizing.
Asana also provided an update on its AI Studio product, which launched mid-year and has been ramping quickly. The company reported strong sequential growth in bookings for the third consecutive quarter.
AI Studio is a no-code workflow automation tool that lets users build complex processes without writing code. Early feedback from implementation partners indicates strong adoption and solid ROI, according to Citi’s conversations with them.
The company is also set to launch AI Teammates in Q4, which takes automation a step further by allowing AI agents to operate alongside human workers within Asana workflows.
CFO Parekh described Teammates as “democratizing” AI Studio because it can actually help users build workflows automatically. She called it a potentially larger opportunity than AI Studio, given its broader applicability across departments and use cases.
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What the Market Is Telling Us About Asana Stock
Citi’s bullish call on Asana stock hinges on two major factors: improved execution under new CEO Dan Rogers and accelerating adoption of AI-powered products.
Rogers joined Asana in September after leading Adobe’s Digital Experience business, and Enders sees his experience as a key catalyst for improving sales and marketing efficiency, particularly in the enterprise segment.
During the Barclays conference, Parekh highlighted that Asana won a massive $100 million three-year deal with a major hyperscaler for over 250,000 seats, demonstrating the platform’s ability to scale at the enterprise level.
On the AI front:
- Citi expects AI Studio to contribute up to $16 million in annual recurring revenue by the end of fiscal 2027. While that’s still a small percentage of Asana’s $800 million-plus ARR base,
- Parekh emphasized that new products become meaningful contributors to net new bookings much faster than they show up in overall ARR.
- She confirmed that AI Studio is already playing a significant role in renewal conversations and expansion deals, particularly with tech customers who had been a headwind over the past year.
The stabilization of net revenue retention is arguably the biggest driver behind Citi’s upgrade.
Parekh detailed several reasons for increased confidence:
- Gross retention improved across all customer cohorts
- Net retention improved for the second consecutive quarter (especially in the 100,000-plus customer segment), and
- Monthly retention in the small business segment hit 12-month highs.
Tech renewals, which had been flagged as a risk, actually turned into expansion deals in some cases, thanks to cross-sell opportunities with AI Studio and foundational service plans.
Asana’s stock has also benefited from reducing its exposure to the tech vertical, which now accounts for about 25% of ARR, down from roughly 33% a year ago.
Parekh noted that tech customers who are renewing for the second time aren’t coming back for another round of seat cuts, meaning the company is lapping the worst of the downsizing wave.
With utilization improving across the board and customers buying multiple products showing much lower churn rates, the retention picture is improving.
The company still faces headwinds, particularly from SEO disruption caused by the rise of AI-powered search engines like ChatGPT and Perplexity.
This has impacted top-of-funnel traffic for Asana’s self-serve business. However, management outlined several initiatives to address this, including reallocating marketing spend to channels such as YouTube, Reddit, and Quora, where LLMs source content.
The company is also restructuring its website content to be more AI-search-friendly with short-form videos, webinars, and ROI calculators.
While the headwind persists, Parekh said, month-over-month improvements in website traffic suggest the company will eventually reach a crossover point at which higher conversion rates offset lower traffic volumes.
Looking ahead, Asana stock appears positioned for a growth reacceleration. Parekh laid out the building blocks: stabilizing net retention, improving product-led growth dynamics, expanding channel partnerships (currently single-digit percent of ARR versus 40-60% for competitors), and ramping AI product contributions.
She didn’t commit to a timeline but expressed confidence that the company can reaccelerate growth while continuing to expand margins.
The 12 percentage points of margin improvement this year have freed up cash to reinvest in the AI platform, setting up a potential flywheel where better products drive stronger retention and expansion.
For investors, Citi’s upgrade reflects confidence that Asana stock is undervalued, given the company’s improving fundamentals and AI-driven growth opportunities.
The combination of new leadership, stabilizing retention metrics, and differentiated AI products makes Asana an attractive bet on the collaborative work management category.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
