Wells Fargo has singled out Couchbase as an attractive option for investors seeking exposure to the artificial intelligence (AI) market, calling it the “cheapest way” to tap into this rapidly growing industry. The database software stock was initiated with an overweight rating and a price target of $26 per share, representing a potential 24% increase from its previous closing price of $20.98.
Couchbase, which operates cloud-based database platforms like Couchbase Server and Couchbase Lite, caters to both business and AI applications. Although the stock has experienced a slight decline of nearly 7% since the beginning of this year, it surged by almost 70% in 2020.
Highlighting the company’s potential, analyst Andrew Nowinski emphasized that Couchbase could achieve over 30% annualized recurring revenue (ARR) growth in the medium term, driven largely by its cloud service product Capella. Nowinski described Couchbase as a more affordable alternative to industry leader MongoDB, making it an appealing choice for investors looking to capitalize on the AI market.
According to Nowinski, the widespread adoption of Couchbase’s Capella software-as-a-service (SaaS) solution will play a pivotal role in achieving the targeted ARR growth and attaining operating income breakeven by FY27. Furthermore, he predicted that Couchbase is poised to generate positive free cash flow within the next two to three years, resulting in profitability that will further enhance its valuation.
As the demand for AI technologies continues to escalate, Couchbase’s cost-effective approach positions it as an accessible opportunity for investors seeking exposure to this burgeoning market. With a clear path to growth and profitability, Couchbase has the potential to deliver significant returns for investors in the years to come.
The source of the article is from the blog smartphonemagazine.nl