Guggenheim Sees 20% Long-Term Growth for monday.com (MNDY) as AI Adoption Accelerates

Core Insights - Guggenheim initiated coverage of monday.com Ltd. with a "Buy" rating and a $250 price target, citing significant upside potential in new Annual Recurring Revenue (ARR) and multi-year growth opportunities [1] - The company has transitioned from a viral, self-serve strategy to a more sales-led, multi-product approach, now serving over 250,000 customers and 2.5 million paying users [1] - Newer products, including CRM, Dev, and Service, account for approximately 10% of ARR and have experienced over 80% year-over-year growth in Q3 2025, compared to 22% growth in its core Work Management offering [1] AI Features and Market Position - monday.com’s AI features, such as vibe coding, have facilitated the creation of over 60,000 applications [2] - Guggenheim projects a long-term growth potential of 20% for the stock, arguing that current pricing reflects a zero-growth scenario that is unjustified [3] Financial Performance and Valuation - The company is on track to achieve revenue growth exceeding 26% and a free cash flow (FCF) margin above 27% this year, indicating a balanced Rule of 50+ company [4] - Current share pricing suggests a worst-case scenario of AI-driven productivity leading to a decline in seat count, which is considered unrealistic [4] - Seat growth has stabilized at over 15% from Q1 2025 to Q3 2025, supported by strong momentum in large customer segments, with achievable consensus estimates for FY26/FY27 [4]