DA Davidson Sees Near-Term Stabilization In MongoDB

As it closes out its first year on the public markets, Mongodb Inc MDB is celebrating 137-percent growth in value — a trajectory experts expect to soon stabilize.

The Rating

D.A. Davidson analyst Rishi Jaluria initiated coverage with a Neutral rating and $80 price target.

The Thesis

Davidson considers MongoDB’s run and peer premium justified given the firm’s high growth rate and significant market opportunity. But while bullish long term, the analyst anticipates a near-term pullback in the “fully valued” shares.

“MongoDB has a unique software business model under AGPL, which gives MongoDB a competitive moat while still allowing for community-based innovation,” Jaluria wrote in a note.

By the analyst’s assessment, MongoDB is one of the fastest-growing software companies and still boasts growth opportunities in portfolio expansion and market-share poaching from the likes of Oracle Corporation ORCL.

“We like MongoDB’s strong value proposition and believe the company is well-positioned to benefit from companies modernizing their database technologies and moving workloads from legacy on-premise relational databases, including Oracle, to next-generation solutions, including MongoDB, that are significantly less expensive and document-based,” Jaluria wrote.

He forecasts a 2019 non-GAAP bottom-line of $(1.62) on 48-percent revenue growth.

Price Action

At time of publication, shares were trading at $76.03.

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