By Mackenzie Tatananni

While MongoDB issued conservative guidance that drew mixed reactions from some analysts, Wall Street remains confident that the software company is poised to capitalize on the artificial intelligence boom.

The New York-based company reported adjusted earnings of $1.28 a share for the quarter that ended Jan. 31, handily beating analysts' calls for 66 cents, according to FactSet. Quarterly sales of $548 million also topped Wall Street's forecast of $521 million.

Sales increased by 20% from the previous year, while adjusted earnings rose by 48% over the same period, MongoDB said.

The company's soft outlook for the current fiscal year weighed on the stock Thursday. MongoDB said it sees revenue hitting between $2.24 billion and $2.28 billion for the year; analysts were expecting $2.33 billion.

Shares of MongoDB plunged 25% to $199.35, on pace for the largest one-day percentage drop since Sept. 1, 2022, when they declined 25% after weak earnings guidance.

A handful of analysts slashed their price targets following MongoDB's latest earnings report, pointing to the soft fiscal-year guidance.

Wells Fargo analysts downgraded the stock from Overweight to Equal Weight on Thursday and lowered their price target on shares to $225 from $365, representing a potential upside of 12%.

Many others on Wall Street held their buy ratings. In fact, of 36 analysts surveyed by FactSet, 27 rate MongoDB at Buy or the equivalent, eight rate it at Hold, and one at Underweight.

Morgan Stanley analysts cut their price target to $315 from $350 while maintaining an Overweight rating, citing a "disappointing" fiscal 2026 revenue growth outlook of 12% to 14%, missing the consensus of 17% and below-consensus operating margin guidance.

The company's guidance was "not what we were hoping for," the analysts wrote. However, key components of their investment thesis are "playing out as anticipated," including management's confirmation that cloud workloads acquired in the prior fiscal year are growing and on course to "contribute meaningfully" to growth in the current year.

Wedbush analysts maintained an Outperform rating while trimming their price target to $300 from $360 to reflect a lower multiple. While there are some "bumps in the road" heading into the current fiscal year, the analysts say MongoDB is still in the early stages of monetization.

The company's Atlas cloud database platform is "starting to see further stabilization as it takes up a larger portion of its pipeline," the analysts wrote, asserting that MongoDB is "well-positioned to capitalize as the AI Revolution continues."

Truist Securities analysts trimmed their price target by $100 to $300 and reiterated a Buy rating on the stock. "There were a number of puts and takes in the commentary on the call, and we believe that the net-net is that the guidance for the year ahead could prove conservative," the analysts wrote.

Guggenheim analysts maintained a Buy rating and lowered their price target to $300 from $325. The analysts argued that there was a "significant disconnect" between the quality of MongoDB's business and its valuation.

The analysts noted that the company has a "historically conservative guidance approach vs. peers guiding more aggressively" that may have exacerbated Thursday's selloff.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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March 06, 2025 15:24 ET (20:24 GMT)

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