MongoDB shares retain Neutral rating, Mizuho raises target after Q2 revenue beat By Investing.com

Mizuho raised its price target on Friday. Mongo DB (NASDAQ:) to $275 from $250, maintaining a neutral rating. The adjustment came after MongoDB’s second-quarter earnings report, which beat consensus expectations for revenue and margins. The company’s management team also raised its fiscal 2025 growth forecast to 14-15%, beating the consensus of 13%. The announcement sent MongoDB shares up 13% in after-hours trading.

MongoDB attributed the positive quarter to significant new workload acquisitions and slightly better-than-expected trends in Atlas (NYSE:A) consumption. Atlas revenue grew 27% year over year, compared to 32% growth in the prior quarter, despite a challenging macroeconomic environment. The company also saw continued strength in its Enterprise Advanced (EA) segment, as customers added new workloads.

The company has shown signs of improving sales productivity, which has been instrumental in driving strong new customer acquisitions, especially after addressing implementation issues it faced in the first fiscal quarter. MongoDB management highlighted that while AI capabilities are not expected to impact short-term results, the company is strategically positioned to benefit from AI-driven growth in the longer term.

In light of these developments, Mizuho has revised its estimates upward, setting a new price target of $275 based on a 12-month trailing-month (NTM) value to 11x revenue multiple. The updated target reflects the firm’s recognition of MongoDB’s recent performance and potential for sustained growth.

In other recent news, MongoDB, Inc. reported a 13% year-over-year increase in revenue for the second quarter of fiscal 2025, to $478 million. The company’s Atlas product played a significant role, contributing 71% of total revenue. MongoDB also reported non-GAAP operating income of $52.5 million and a non-GAAP operating margin of 11%. The company’s customer base expanded to more than 50,700, adding more than 1,500 customers during the quarter.

MongoDB is bullish on its long-term growth opportunities, particularly in AI, through its AI Applications Program (MAAP). The company expects third-quarter revenue to be in the range of $493 million to $497 million, and full-year 2025 revenue is expected to be in the range of $1.92 billion to $1.93 billion. Despite the macroeconomic challenges, MongoDB continues to see strong new business and sales productivity, and remains confident in its long-term execution capabilities.

InvestingPro Insights

Following Mizuho’s upbeat earnings report and revised price target for MongoDB (NASDAQ:MDB), InvestingPro’s data and advice highlights several key financial metrics and forecasts that investors may want to consider. MongoDB is currently trading at a market cap of around $18.02 billion, reflecting the high growth potential the market attributes to the company. The company’s revenue has shown a strong 29.15% growth over the past twelve months as of Q1 2023, with a gross profit margin of 74.52%, indicating strong underlying business performance.

Two InvestingPro tips that are particularly relevant to MongoDB’s current situation are that the company has more cash than debt on its balance sheet, and that net income is expected to grow this year. These factors point to a strong financial position and an optimistic outlook for profitability. Notably, MongoDB’s liquid assets also exceed its short-term liabilities, providing further evidence of financial health. Investors can find additional insights, including InvestingPro’s 10 overall tips for MongoDB, by visiting https://www.investing.com/pro/MDB.

However, it is worth noting that MongoDB has been trading at a high revenue multiple and a high price/book multiple of 14.2, which may raise questions about the stock’s valuation. Despite the recent price decline, down 45.1% over the past six months, analysts remain bullish, expecting the company to turn profitable this year. InvestingPro’s fair value estimate stands at $228.84, indicating a more conservative valuation compared to the analyst’s current target of $327.5. These metrics and insights can help investors gauge MongoDB’s financial health and growth prospects in the context of its current market valuation.

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