BofA warns Fed risks policy mistake with early rate cuts
On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on MongoDB shares (NASDAQ:MDB), reducing the price target to $250 from the previous $320 while retaining a Neutral rating on the stock. The decision followed MongoDB’s release of their fourth fiscal quarter results, which showed revenues of $548 million, marking a 20% year-over-year increase. This figure surpassed the consensus estimate of $519 million, which had anticipated a 13% year-over-year growth. The stronger performance was attributed to a stabilization in consumption revenue and a 24% year-over-year growth in Atlas (NYSE:ATCO), MongoDB’s database as a service offering, although this represented a slight slowdown from the 26% growth seen in the third fiscal quarter. With a market capitalization of nearly $20 billion and an overall "FAIR" financial health rating according to InvestingPro, MongoDB maintains strong liquidity with a current ratio of 5.2.
Despite the positive results, MongoDB’s revenue guidance for fiscal year 2026 was less encouraging, projecting a 12.6% year-over-year growth, which fell short of the consensus expectations of 18%. The company cited a $50 million headwind from non-Atlas multi-year renewals as a contributing factor to the conservative guidance. This forecast is notably below the expectations held by the buy-side, which had anticipated stronger growth. InvestingPro data shows MongoDB’s impressive five-year revenue CAGR of 45%, though current trading metrics suggest the stock is trading at a premium valuation multiple. For deeper insights into MongoDB’s valuation and growth metrics, including 8 key ProTips, subscribers can access the comprehensive Pro Research Report.
MongoDB’s management has signaled a continued investment in research and development (R&D) and sales efforts. The company is shifting its focus towards enterprise customers and reducing its emphasis on the mid-market segment. The strategy is part of a longer-term vision, which includes harnessing artificial intelligence opportunities. However, Mizuho does not anticipate immediate benefits from this strategic direction to reflect in the near-term performance of the company.
In light of these developments, Mizuho has revised its estimates downward, setting the new price target at $250. This target is based on a next twelve months (NTM) enterprise value to revenue multiple of 8x. The firm reiterated its Neutral rating, suggesting that the current valuation does not present a compelling case for an upgrade in the rating at this time.
In other recent news, MongoDB’s fiscal fourth-quarter earnings were stronger than expected, with a non-GAAP EPS of $1.28, surpassing the consensus estimate of $0.66. The company reported revenue of $548.4 million, exceeding the anticipated $519.6 million, reflecting a 20% year-over-year increase. However, MongoDB’s guidance for fiscal year 2026 was lower than market expectations, with projected revenues between $2.240 billion and $2.280 billion, compared to the consensus of $2.325 billion. This conservative outlook has prompted several firms to adjust their price targets. Needham cut its price target from $415 to $270, while Truist reduced theirs from $400 to $300, both maintaining a Buy rating. Stifel also decreased its target from $425 to $340, and DA Davidson lowered theirs from $360 to $275, both retaining a Buy rating. Citizens JMP adjusted their target to $345 from $380, keeping a Market Outperform rating. Analysts noted that while Atlas, a key revenue driver, showed stable growth, the company’s overall guidance reflects challenges in sustaining high growth rates seen in the past.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.