Investing.com -- Redburn Atlantic upgraded MongoDB (NASDAQ: MDB ) to Neutral from Sell, as the firm sees limited downside after a period of underperformance and multiple compression. Though it cut its target price on the stock by $10 to $170.
“The valuation multiple is trading near all-time lows, and earnings expectations have already been reset,” Redburn analysts wrote in a note adding that while macro-related risks remain, these are “not company-specific.”
MongoDB shares have underperformed the broader software sector by 25% since March 2024.
Redburn said its previous Sell rating reflected concerns over the company’s “eroding” competitive moat, stemming from both hyperscaler pricing pressure and PostgreSQL’s improving capabilities.
“These concerns remain intact,” the firm said adding “what has changed, however, is valuation”
However, Redburn now sees MongoDB’s valuation as approaching a fundamental floor. The firm highlighted structural concerns around MongoDB’s product architecture, including restrictive storage scaling and intensified competition from the open-source community.
Still, with the stock’s EV/sales multiple near historical lows, Redburn believes much of the bad news is priced in.
The $170 target is based on a 50/50 DCF and multiple methodology, with assumptions including a 9% WACC and 4.5% terminal growth rate.
The analysts said they are now relatively in line with consensus for FY26.