After a sharp decline in the stock market, there is now a turnaround! Navan (NAVN.US) is receiving unanimous approval from Wall Street due to its potential in artificial intelligence.

After experiencing a rapid decline following last month's $9.231 billion IPO, the corporate travel and expense management platform Navan Inc. (NAVN.US) received the much-needed support from Wall Street on Monday, with analysts believing that the company is currently undervalued. Twelve institutions initiated coverage on the stock for the first time, all giving it a "buy" rating with an average 12-month target price of $25.33 per share, implying a 69% upside from last Friday's closing price. The team led by Citigroup analyst Steven Enders described Navan as an "innovator and disruptor" in the corporate travel sector, highlighting its cloud-native architecture and AI-centric approach as giving it a significant advantage over existing competitors heavily reliant on services. However, the market has not been fully convinced, as the stock only rebounded 4.3% to $15.61 on Monday (as of 3:29 pm), still more than a third lower than its IPO price. Nevertheless, analysts' vote of confidence provides Navan with a chance for redemption. Against the backdrop of overall lackluster IPO returns this quarter, Navan has performed the worst among US IPOs that raised over $50 million. For Mizuho Securities' Siti Panigrahi, Navan is well-positioned to disrupt the fragmented and outdated corporate travel ecosystem dominated by companies like Amex GBT, BCD Travel, and SAP Concur. The institution expects that through product expansion, increased customer adoption, and international market growth momentum, Navan will maintain a compound annual revenue growth rate exceeding 25% by the end of 2028. Panigrahi wrote, "The corporate travel market is vast and ripe for disruption." He pointed out that Navan's revenue based on usage accounts for less than 1% of its total addressable market of approximately $185 billion, with the corporate travel segment alone estimated to be worth $86 billion. Citigroup set a target price of $26, stating that Navan's platform allows it to gain share in both managed and unmanaged travel markets, as well as to expand more deeply into expense and payment areas. This view aligns with Oppenheimer & Co. and Mizuho, with the latter two institutions both giving the stock an "outperform" rating and a target price of $25. Mizuho specifically highlighted Navan's proprietary global inventory aggregation platform, Navan Cloud, as a foundational moat for the company. The platform provides real-time access to over 600 airlines and 2 million accommodation options. The institution also mentioned that the company's AI-powered operating system, Navan Cognition, is a key contributor to profit margin expansion. The AI assistant Ava, built on Cognition, now handles over 50% of customer service requests, helping drive approximately a 10 percentage point improvement in gross margins over the past two years. Despite some investors being cautious about recent operating profit margin balances and the cyclical nature of corporate travel demand, Citigroup's Enders stated that Navan is still "undervalued," with its adjusted total revenue multiple sitting in the bottom quartile relative to a broader peer group in the software industry. Oppenheimer's Jed Kelly believes that the post-IPO selloff has created an attractive entry point for long-term investors and noted Navan's "significantly faster growth trajectory than the industry." The institution forecasts a 303 basis point expansion in gross margin up to the first half of 2026, primarily driven by AI-powered automation. Although research coverage is generally bullish, Navan is currently in a loss-making state. In the six months ending on July 31, the company reported a net loss of $99.9 million, a slight increase from the $92.5 million loss in the same period last year, despite revenue growth. Analysts acknowledge that sales and marketing expenses are a drag in the short term but state that their AI-powered tools will help drive profit growth. Citigroup expressed concerns about Navan's near-term profit margin situation, particularly the ratio of sales and marketing costs to revenue. However, Enders mentioned in an interview that although these ratios are higher compared to other software companies, Navan's customer acquisition productivity, individual customer profitability, and payback period remain robust, supporting a bullish outlook.