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On Thursday, BofA Securities analyst Brad Sills adjusted the price target for MongoDB stock (NASDAQ: NASDAQ:MDB), reducing it significantly to $286 from the previous $420, while continuing to endorse the stock with a Buy rating. The revision reflects a tempered revenue and margin forecast for fiscal year 2026. Currently trading at $264.13, InvestingPro analysis suggests the stock is slightly overvalued at current levels. Despite the price target reduction, Sills remains optimistic about the stock’s prospects, aligning with the broader analyst consensus that maintains a bullish outlook with price targets ranging from $180 to $520.
Sills explained that the new price target is based on a valuation of 9 times the estimated sales for calendar year 2026, a decrease from the prior multiple of 11 times. This adjustment accounts for MongoDB’s growth and is set at a discount compared to larger peers, considering the variability in consumption and the company’s ongoing transition phase. InvestingPro data shows MongoDB maintains strong financial health with a current ratio of 5.2 and holds more cash than debt on its balance sheet, providing stability during this transition period.
The analyst pointed to several factors that suggest a potential uptick in MongoDB’s performance. These include increased usage of new workloads, diminishing effects from weaker consumption headwinds experienced in the first quarter of fiscal year 2025, and a strategic shift towards expanding deals with well-funded accounts. Supporting this outlook, MongoDB has demonstrated solid revenue growth of 19.22% over the last twelve months, with analysts expecting continued profitability improvement in the coming year.
MongoDB’s stock is currently trading at 6.1 times the projected sales for calendar year 2026, which, when adjusted for the expected 19% growth rate, indicates potential downside support. Additionally, Sills believes that the growth rates for total revenue and Atlas (NYSE:ATCO), MongoDB’s database-as-a-service offering, have reached their lowest at 12% and 21%, respectively, and are poised for reacceleration throughout the year.
The financial firm’s reassessment comes at a time when investors are closely monitoring the tech sector for signs of stabilization and growth potential amidst a broader market recalibration. MongoDB’s focus on strategic account expansion and solid new workload implementations are seen as key drivers for its anticipated recovery and growth.
In other recent news, MongoDB reported strong financial results for Q4 FY2025, with earnings per share (EPS) of $1.28, significantly exceeding analyst forecasts of $0.66. The company’s revenue also surpassed expectations, reaching $548.4 million compared to the projected $520.54 million. Despite these positive results, MongoDB’s stock experienced a 16% decline in aftermarket trading, possibly due to revised future guidance. The company has lowered its FY2026 revenue growth forecast to a 12.6% increase, down from the previously anticipated 17.5%, partly due to a decline in non-Atlas revenue.
Goldman Sachs analyst Kash Rangan adjusted MongoDB’s stock price target from $390 to $335, while maintaining a Buy rating, reflecting concerns over the company’s revised revenue projections. The Atlas platform continues to be a significant revenue driver, growing 24% year-over-year and accounting for 71% of total revenue. MongoDB also completed the acquisition of Voyage AI for $220 million, aiming to enhance its AI capabilities. The company remains debt-free after redeeming its 2026 convertible notes, highlighting a strong financial position.
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