Shares of MongoDB (MDB -0.08%) have spiked as much as 11% today to all-time highs today after getting an upgrade from Wall Street. Morgan Stanley boosted its rating on MongoDB from equal weight (equivalent to neutral) to overweight (equivalent to buy) while raising its price target from $295 to $439.
Analyst Sanjit Singh argues that MongoDB has become one of the most popular database providers in the market and believes that the database technology company can extend its lead over the competition. MongoDB helps support the development of modern applications, which is helping the company's Atlas offering grow and accelerate customer additions.
Singh suggests that MongoDB now has a path to sustainable growth rates of 30% or higher, thanks to the revenue mix shifting toward public cloud providers while the business also continues to mature and scale. The open-source version of MongoDB's software has been downloaded over 100 million times and there are 2 million accounts for the free version of Atlas, Singh notes.
"This trajectory would see MongoDB eclipsing the $1 billion revenue threshold potentially by [fiscal year 2023] at [a] rate of growth of ~30%," the analyst wrote in a research note to investors. For context, MongoDB's outlook calls for revenue of $574.4 million to $576.4 million this fiscal year.
The analyst also believes that MongoDB is reasonably valued, trading at discount to other high-growth peers in the software-as-a-service (SaaS) sector.