Wedbush Downgrades Smartsheet On Microsoft Competition

Smartsheet Inc (NYSE: SMAR) faces increasing competition in the collaboration tools space, especially after the October rollout of a redesigned version of Microsoft Corporation’s (NASDAQ: MSFT) Project software product, with new integrations and subscription plans, according to Wedbush.

The Analyst

Wedbush’s Steve Koenig downgraded Smartsheet from Outperform to Neutral, lowering the price target from $62 to $42.

The Thesis

The latest version of Microsoft’s Project increases the level of risk around Smartsheet’s momentum, while the company also faces the risk of longer sales cycles as well as high churn in its sales personnel, Koenig said in a note.

He noted that Smartsheet’s strategy of integrating with a wide range of popularly used tools and systems seems to be the right approach for driving enterprise adoption and this strategy is what differentiates the company’s offering from Microsoft’s Project.

Koenig said, however, that Project’s new subscription plans, deeper integrations and new features could pose challenges for Smartsheet. He added that emerging private competitors like Asana, Wrike, Workfront, Monday.com and Planview are also investing in better targeting of the collaborative work management market.

The analyst further mentioned that recent checks highlighted Smartsheet’s problems of high churn among front-office employees and engineering staff, which “has us scratching our heads.”

Price Action

Shares of Smartsheet were down 4.03% at $38.15 at the time of publishing on Monday.

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