By Senad Karaahmetovic
Morgan Stanley analysts downgraded MongoDB (NASDAQ:MDB) to Equal Weight from Overweight as they see increased uncertainty.
The price target is lowered to $215 from $368 per share as the analysts would like to see more visibility before becoming more constructive on MDB shares. Long term, MongoDB remains one of Morgan Stanley's "favorite long term growth stories in software."
However, in the near term, they are increasingly concerned about tightening IT budgets, as well as the outlook for growth and margins.
"The decline in visibility coupled with the lack of material profitability leads us to downgrade shares to Equal-weight from Overweight," the analysts further explained in a note.
The analysts highlighted their 3 primary concerns around MDB at the moment.
- The potential for growth to decelerate meaningfully over the next 3-4 quarters;
- Consensus estimates calling for 28% growth in FY24 appear too high; and
- Lack of clarity on how management will balance investments to support long-term growth.
Elsewhere, KeyBanc analysts initiated research coverage at Overweight with a $215 per share price target.
"While Mongo faces ongoing near-term macro headwinds to its 65% consumption business, we are modeling FY24 below the Street to incorporate that risk. We see Mongo as a long-term secular leader within the substantial $80B DB market with non-relational growth driven by the shift to the cloud and need for flexible data handling and horizontal scalability, and see MDB as a compelling “look across the valley” stock," the analysts said in an initiation note.
At 09:25 EST (14:25 GMT), MongoDB shares are down 4%. Based on Friday's closing price, MDB stock is down about 70% year-to-date (YTD).