Monday.com (MNDY) is expected to deliver a modest Q4 revenue beat of about 2% and issue a below-consensus Q1 and 2026 revenue guidance that will eventually serve as a clearing event, Morgan Stanley said in a note Tuesday.

The company will likely guide for a 19% to 20% revenue growth for Q1 and 18% to 19% revenue growth for the full year, both below expected increases of 22% and 21%, respectively, according to the note.

This outlook is expected to further push shares lower, with shares already trading at a steep discount to peers and down 35% over the last 3 months, but the brokerage said this should serve as a clearing event that will allow the company to reset expectations and set the stage for positive estimate revisions next year.

"We expect underlying fundamentals to remain strong pointing to stabilized top-of-funnel activity, continued rapid growth in multi-product and momentum upmarket," Morgan Stanley said.

The brokerage said it was leaning cautious into Monday.com's Q4 results, which are scheduled for release on Feb 9.

Morgan Stanley maintained an overweight rating on the stock, but lowered its price target to $200 from $236.

Monday.com shares were down 2.9% in recent trading Tuesday.

Price: 126.26, Change: -3.80, Percent Change: -2.92