On Friday, Scotiabank adjusted the stock price target for MongoDB (NASDAQ:MDB), a leader in the NoSQL database market, to $385.00 from the previous $400.00 while maintaining a Sector Perform rating. The adjustment follows MongoDB's fourth-quarter earnings beat and the establishment of modest financial guidance for Fiscal Year 2025 (F25).
The new revenue growth targets for F25, even with anticipated performance similar to Fiscal Year 2024 (F24), are considered slightly below market expectations and somewhat disappointing when compared to peers such as Datadog (NASDAQ:DDOG) and Elastic (NYSE:ESTC), who have shown signs of stabilization.
MongoDB is expected to experience a decline in operating margins in F25 due to non-recurring factors and an increase in hiring. The company, recognized for its significant potential for long-term growth and as a potential beneficiary of near-term AI advancements, is perceived to have these advantages unfold more slowly than some investors might hope. This sentiment has led to the view of MongoDB as a "show-me story" in F25, with high investor expectations necessitating demonstrable progress.
Scotiabank's revised price target is based on a reduction in the revenue forecast for Fiscal Year 2026 (F26) by 11%. Despite the reduction, the valuation multiple has been increased from approximately 12.5 times Enterprise Value to Fiscal Year 2026 Estimated Sales (EV/F26E Sales) to around 14 times, aligning more closely with the valuation multiples of MongoDB's peer group. This adjustment reflects a recalibration of the company's expected financial performance and market position.
The report from Scotiabank underscores MongoDB's standing in the market and the challenges it faces in meeting investor expectations while navigating the competitive landscape and internal growth strategies. The new price target takes into account the company's recent financial results and forward-looking projections, positioning MongoDB in the context of its industry peers.
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