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MongoDB (NASDAQ:MDB) shares fell more than 2.5% in pre-market trading on Friday after investment firm Guggenheim cut its rating on the database company to sell after a survey showed there is not likely to be a rebound in spending anytime soon.

“Based on a survey of 50 MongoDB customers, the substantial majority expects spending on MongoDB to remain flat in [the second-half of 2023 versus the first-half],” analyst Howard Ma wrote in an investor note.

“Even in what we consider to be an optimistic, yet plausible scenario where MongoDB grows New ARR by about 10% (vs. +12% in FY23) resulting in 30% revenue growth, the stock would still trade at 14.0x EV/NTM Recurring Revenue, which we view as overvalued and with essentially no FCF support,” Ma added.

Despite the rating downgrade, Ma raised his per-share price target to $210 from $205, citing “modestly” raised estimates.

Ma added that since MongoDB (MDB) issued fiscal 2024 revenue guidance on March 8, calling for growth of only 15% to 18%, the stock is up 36%, compared to the 16% gain for the Nasdaq and 6% gain for the S&P 500.

Analysts are largely cautious on MongoDB (MDB). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates MDB a HOLD.

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