The pace of digital transformation and cloud migration accelerated throughout the pandemic, giving a significant boost to MongoDB Inc. (MDB), a leading database platform that enables developers to build and upgrade applications.
Thanks to favorable industry trends, the launch of Atlas (its multi-cloud database-as-a-service), customer growth, and robust direct sales channel, MongoDB stock surged approximately 173% in 2020.
However, profit booking in equities and expected moderation in growth rate weighed on MongoDB stock, which declined about 10.6% in the last six months. (See MongoDB stock charts on TipRanks)
Notably, the momentum in MongoDB’s business sustained in the first quarter of the current fiscal year. MongoDB’s top- and bottom-line both handily surpassed the Street’s estimates, reflecting 73% growth in Atlas.
However, easing restrictions and tough year-over-year comparisons suggest that MongoDB’s growth rate could moderate a bit in Q2.
Setting expectations on Q2 and citing its proprietary database, Jack Andrews of Needham said that the developer interest in MongoDB has slightly moderated from record prior-year levels. However, the 5-star analyst added that it remains “well above pre-pandemic levels and should continue to translate favorably to customer acquisition momentum.”
Andrews has a Buy rating on MongoDB stock with a price target of $415, reflecting 13.7% upside potential to current levels. His bullish view is based upon the continued growth of MongoDB’s Atlas offering and strong expansion rates.
Andrews is upbeat on the company’s direct sales channel and said that “MDB’s direct sales team has become adept at identifying Atlas accounts that are most likely to expand and facilitates customer success.” He added that MongoDB’s platform offers everything needed by customers to build applications. Andrews expects these offerings to “drive expansion growth over time as customers adopt them alongside the core document DB.”
MongoDB will announce its Q2 financials after the market closes on September 2. Wall Street expects MongoDB to report revenues of $184.19 million in Q2, reflecting year-over-year growth of about 33%.
Meanwhile, analysts expect the company to post an adjusted loss of $0.40 a share compared to a loss of $0.22 per share in the prior year period.
On TipRanks, MongoDB is a Moderate Buy based on 8 Buys and 4 Holds. The average MongoDB price target of $385.50 implies approximately 5.6% upside potential to current levels.
Disclosure: Amit Singh held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
