The market opportunity for Mongodb Inc MDB, a software developer behind the open source database MongoDB, is not compelling — at least in the near term, according to Nomura Instinet.
The Analyst
Analyst Christopher Eberle downgraded Mongodb from Neutral to Reduce and increased the price target from $43 to $63.
The Thesis
The market opportunity for Mongodb is a multiyear — if not multidecade — one, given the intense competition and "deep-pocketed incumbency," Eberle said in a Tuesday note. (See his track record here.)
MongoDB has competition from Microsoft Corporation MSFT's Cosmos DB, which has grown from zero to $100 million-plus revenue, the analyst said.
Nomura expects Mongodb's total revenue growth to accelerate from an estimated 50 percent in 2019 to 60-percent-plus in 2020, with the sell-side firm estimating subscription revenue at $371 million, or about 30 percent above consensus.
The new price target for the shares implies 10 times the estimated subscription revenue for 2020, Eberle said.
" ... With intense competition from hundreds of smaller players as well as deep-pocketed incumbents like MSFT, Amazon.com, Inc. AMZN and IBM IBM, we believe the battle will be long and hard-fought, and it's difficult to predict who will come out on top."
The Price Action
Mongodb shares were down more than 4 percent at $75.69 at the time of publication Tuesday.
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