MongoDB Inc (NASDAQ:MDB)'s 108% stock-price gain in 2023 has its shares now matching the peak forward revenue multiple of about 16 times over the last two years, prompting UBS analysts to caution investors to take their "foot off the accelerator".
In an update to clients, they downgraded MongoDB stock to ‘Neutral’ from ‘Buy’ while cutting their price target to $410 per share from $475.
"We still like the durable ~30% long-term growth story, but absent a material database revenue pull-through from AI workloads in 2024, we conclude that a continued re-rating of the stock is unlikely," the analysts wrote.
They added that while they’re enthusiastic about an AI-driven database growth catalyst, they’re not picking up material evidence that this is playing out yet but may prove to be a 2025 catalyst, or the second half of 2024 at the earliest.
Analysts at UBS stated, however, that sentiment remains positive on a view that MongoDB growth could be lifted by the AI theme as well as an improving overall IT spending environment.
Shares of MongoDB fell 2% to $365.09 in late-afternoon trading on Thursday.