Analyst Downgrades Mongodb To Reflect 'Intense Competition'

The market opportunity for Mongodb Inc (NASDAQ: 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 (NASDAQ: 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. (NASDAQ: AMZN) and IBM (NYSE: 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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