On Friday, Mizuho issued an updated assessment for MongoDB (NASDAQ: NASDAQ:MDB) shares, reducing the price target to $250 from the previous $380, while maintaining a Neutral stance.
The adjustment comes in the wake of MongoDB's latest financial results, which, although surpassing consensus expectations in terms of revenue and margins, including a 32% year-over-year growth in its Atlas (NYSE:ATCO) product, fell short of what investors anticipated.
MongoDB's management has revised its forecast for fiscal year 2025 growth down to 12-13%, a decrease from the consensus estimate of 15%. This news prompted a 31% drop in the company's shares in after-hours trading.
The revision is attributed to lower-than-expected workload growth and a smaller cohort of new workloads in the first quarter than was anticipated.
The lowered guidance was primarily linked to a challenging macroeconomic environment, a situation that other software companies have also noted. Additionally, MongoDB's management alluded to some sales execution issues that further impacted the outlook.
In light of these developments, Mizuho has recalibrated its estimates for MongoDB. The new price target of $250 reflects a next twelve months enterprise value to revenue multiple of 10 times.
This move by Mizuho underscores the cautious stance analysts are taking regarding MongoDB amidst a backdrop of economic uncertainty and company-specific challenges.
InvestingPro Insights
In tandem with Mizuho's reassessment, InvestingPro data and tips offer additional perspectives on MongoDB's current financial standing. With a market capitalization of $22.74 billion and a significant revenue growth of 31.07% in the last twelve months as of Q4 2024, MongoDB demonstrates a robust expansion in its financials. However, this is contrasted by its negative P/E ratio of -125.23, indicating that the company is currently not profitable. The stock has indeed taken a substantial hit recently, with a 1 month price total return of -15.11% and a 3 month price total return of -30.74%, aligning with the company's downward revision of its fiscal year 2025 growth forecasts.
Despite these challenges, MongoDB's liquid assets surpass short-term obligations, providing some financial stability. Moreover, an InvestingPro Tip suggests that the stock is now in oversold territory according to its Relative Strength Index (RSI), potentially signaling a buying opportunity for investors considering the company's long-term growth trajectory and its strong performance over the last decade. Furthermore, analysts predict that MongoDB will become profitable this year, which could indicate a turnaround for the company.
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