MongoDB Stock Surges on Improved Outlook, but Recovery Remains Uncertain

MongoDB stock gets a boost amid stabilization, but recovery remains uncertain - Scotiabank By Investing.com

On Friday, Scotiabank adjusted its outlook on MongoDB (NASDAQ:MDB) stock, a leading database platform provider. The firm increased the price target on the company's shares to $295 from the previous $250, while keeping a Sector Perform rating on the shares. The adjustment follows MongoDB's recent quarterly performance, which, despite being a tough period for the company, showed signs of stabilization in the second quarter. The top and bottom line results were modestly above expectations, which was enough to trigger a positive reaction in the after-hours trading session. MongoDB's performance comes as a breath of fresh air, particularly given the context of lower investor expectations set by the recent slowing growth at cloud and infrastructure peers such as Snowflake (NYSE:SNOW) and Confluent. The company's share price movement post-earnings was described as a "nice relief rally" by the analyst. Scotiabank's analyst highlighted several reasons for maintaining the Sector Perform rating. Among them is the belief that a rapid rebound in demand for MongoDB's services is unlikely in the year 2024. This is attributed to factors such as the company's software being integral to core operational workloads, which were less likely to be scaled back last year, the absence of a new product cycle in vector databases, and a slower ramp-up in sales capacity. Additionally, MongoDB has set moderate expectations regarding the near-term impact of generative AI on its business. The company noted that while it is positioned as a first-class business, it will take time for customers to deploy production workloads at scale that leverage generative AI technologies. Scotiabank recommends that investors adopt a "wait and see" approach with MongoDB for the fiscal year 2025, suggesting caution amid the current market landscape. In other recent news, MongoDB, Inc. has been a topic of interest after several analyst firms revised their price targets following the company's impressive second-quarter earnings report. Piper Sandler raised its price target from $330 to $335, citing MongoDB's 13% revenue growth and the strong demand for its services. Similarly, Wells Fargo (NYSE:WFC) increased its price target to $350 from $300, following the company's strong performance in the second quarter, where MongoDB reported a revenue of $478 million. Mizuho also raised its price target on MongoDB shares to $275 from $250, maintaining a Neutral rating. These recent developments come after MongoDB reported a 13% year-over-year revenue increase in the second quarter of fiscal year 2025, hitting $478 million. The company also reported a non-GAAP operating income of $52.5 million and a non-GAAP operating margin of 11%. MongoDB's customer base grew to over 50,700, with more than 1,500 new customers added during the quarter. Looking ahead, MongoDB's management has revised its full-year guidance upward and expects Q3 revenue to be between $493 million to $497 million, with full fiscal year 2025 revenue projected to be between $1.92 billion to $1.93 billion. These projections reflect MongoDB's robust demand for its database products and its strategic focus on expanding its AI capabilities and Atlas (NYSE:ATCO) offerings. Following Scotiabank's revised price target for MongoDB (NASDAQ:MDB), current metrics from InvestingPro add further context to the company's financial landscape. With a market capitalization of $18.02 billion, MongoDB holds a significant position in the market. The company's revenue has grown by 29.15% in the last twelve months as of Q1 2023, showcasing its ability to expand despite a challenging economic environment. This growth narrative is further supported by a revenue increase of 22.34% in Q1 2023 on a quarterly basis. InvestingPro Tips indicate that MongoDB has more cash than debt on its balance sheet, which could provide financial flexibility in uncertain times. Additionally, analysts are optimistic, predicting that the company will be profitable this year, which aligns with MongoDB's recent performance that has exceeded expectations. These insights, among others available on InvestingPro, offer a more nuanced view for investors considering Scotiabank's "wait and see" recommendation. For a more comprehensive analysis, investors can find a total of 10 InvestingPro Tips on MongoDB at Investing.com/pro/MDB.

Watch These MongoDB Price Levels After Stock Soars on Boosted Outlook

During pullbacks, investors should monitor the $265 area, which will likely attract buying interest near the double bottom's neckline. Shares in MongoDB (MDB) soared in extended trading Thursday after the company reported better-than-expected earnings and boosted its full-year guidance amid robust demand for generative artificial intelligence (AI) software. The company's shares have slumped more than 33% since the start of the year through Thursday's close after an uncertain macro environment and slower uptake of its flagship Atlas multi-cloud database-as-a-service offering prompted it to cut its outlook in May. MondoDB shares gained 13.5% to $279.00 in after-hours trading Thursday. Below, we'll take a closer look at the MongoDB chart and use technical analysis to locate important price levels worth watching out for. Since gapping sharply lower in late May, MongoDB shares have carved out two distinct swing lows at around the same level, setting the groundwork for a double bottom, a classic chart pattern that typically forms following a steep decline in prices and indicates a potential market bottom. Moreover, while the second swing low made a slightly lower low, the relative strength index (RSI) indicator made a comparatively higher low to create a bullish divergence, a chart signal pointing to waning selling momentum. Indeed, the stock sits positioned to confirm the patten, with the shares projected to open above the formation's neckline on Friday morning after the company's better-than-expected results. Amid further post-earnings momentum, investors should monitor three key overhead price levels of interest. Firstly, it's worth keeping an eye on the $294 area, a location on the chart where market participants who purchased the stock near recent lows may look to lock in profits near the June 1, 2023 close, the day before an earnings-driven breakaway gap. A move above this level could see the shares climb to around $323. Where they would likely run into overhead resistance near a horizontal line joining three prominent troughs that formed between September 2023 and April 2024. Ongoing bullish price action may drive a rally to the $370 region. This is an area on the chart were investors could place sell orders near a multi-month trendline that links multiple peaks and troughs in the stock from June 2023 to May this year. During pullbacks, investors should watch the $265 level, an area where MongoDB shares would likely attract buying interest near the double bottom's neckline, which also marks Friday's projected breakout point. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.