By Senad Karaahmetovic
Morgan Stanley analysts upgraded Confluent (NASDAQ:CFLT) and MongoDB (NASDAQ:MDB) to Overweight from Equal Weight after analyzing data from the firm’s latest AlphaWise survey.
One of the key takeaways from the survey is that the majority of optimizations are already underway and cloud growth expectations reaccelerating in 2024, they wrote in a client note.
As much as 73% of respondents (44% started in 2022, 29% planning to start in 2023) said they are actively engaged in cloud optimization initiatives.
“While we think the headwind from cloud digestion activity on growth over the next few quarters is relatively well understood by the market, encouraging is that companies who are currently optimizing or plan to optimize expect to see acceleration in 2024 (after seeing flat or slower growth in 2023) and plan to have a higher percentage of their applications reside in the public cloud post optimization than what they had planned for pre-optimization,” the analysts said in a note.
Against this backdrop, they raised the rating on MDB with the price target also increased to $270 per share.
“We upgrade MDB to OW given market leadership in the ~$45B operational database market, multiple share gain opportunities and a pivot to profitability.”
Similarly, the price target on CLFT stock goes to $30 per share as the analysts see an “attractive valuation,” coupled with “a major pivot to profitability and a large growth opportunity that remains intact.”
MDB and CFLT shares are up 3% and 3.3%, respectively, in premarket Wednesday.