With a $68 billion addressable opportunity in the operational database market, a strong track record of market share gains, and a competent and experienced management team, MongoDB remains one of Singh’s favorite long-term growth stories in software.
However, as IT budgets tighten, the outlook for growth and margins has become decidedly less clear, in his view.
The decline in visibility, coupled with the lack of material profitability, leads him to downgrade shares.
Keybanc analyst Michael Turits initiated coverage on MongoDB with an Overweight rating and a price target of $215.
He saw stable long-term growth for document-based NoSQL vendor MongoDB in the fast-growing $15 billion non-relational DB market as applications modernize and move to the cloud, with relational database (RDB) replacement providing upside optionality.
While Mongo faces ongoing near-term macro headwinds to its 65% consumption business, he modeled FY24 below the Street to incorporate that risk.
He saw Mongo as a long-term secular leader within the substantial $80 billion DB market with non-relational growth driven by the shift to the cloud and the need for flexible data handling and horizontal scalability. He saw MDB as a compelling “look across the valley” stock.
With a solid appeal to developers, an established ecosystem, and a mature cloud offering (Atlas), Mongo has emerged as the dominant independent general-purpose NoSQL database and a multi-cloud alternative to hyper-scale cloud database services.
Price Action: MDB shares traded lower by 8.73% at $145.93 on the last check Monday.
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