Investing.com -- Morgan Stanley downgraded Asana to Underweight from Equal-weight on Monday, warning that the stock’s recent rally is at odds with mounting risks and a deteriorating market position.

“With shares up 43% since the day after Q4 results, which left us more cautious, we see current premium valuation to SaaS comps and to closest peers at conflict with risks underpinning Asana’s challenged market position in FY26,” Morgan Stanley wrote in a note to clients.

The firm attributed much of the stock’s run-up to insider buying from co-founder Dustin Moskovitz, who has purchased more than $50 million worth of shares since the March earnings report.

But Morgan Stanley cautioned: “We see little support from improvement in demand or fundamentals over this time.”

Analysts flagged intensifying competition in the collaborative work management space, with Asana continuing to lose share to Monday.com and private players.

They also noted persistently weak customer retention metrics. “Overall NRR, NRR for both the >$5K and >$100K cohorts all remain at 96-97%, steadily declining for 3 years. Downsize risk remains.”

Leadership uncertainty amid the ongoing CEO search is said to add further risk to execution and strategic direction.

Morgan Stanley also expressed skepticism about Asana’s FY26 guidance, which it believes may now be too optimistic given recent macroeconomic developments.

“We now see further downside risks to the guide post the change of the macro backdrop,” the analysts wrote, citing tech sector layoffs, tightening budgets, and delayed AI Studio adoption.

“Asana shares are trading at 5x EV/CY26 Sales, similar to peers, but too rich given lower margin profile, more challenged market position and uncertainty,” Morgan Stanley concluded.