The Path to $350 Is Clear
A public holiday in the U.S. makes NYSE and NASDAQ trading closed. However, this is a good time to absorb the latest corporate releases, which have arrived just before the last Friday. MongoDB (MDB, +18.34% in a one-day move) and Marvell Technology (MRVL, +9.16%) were the two lucky stocks to shine as a quick response to better-than-projected quarterly numbers and forward guidance. Here we will discuss the first of the two headliners.
MongoDB CEOs reported solid growth based on the AI (artificial intelligence) applications focusing and expanding its flagship cloud database product's, named Atlas, which grew 27% YoY and accounted for 71% of total sales. This $20 billion+ software company that mostly provides support for its source-available database engine MongoDB without using SQL codes to store big data in flexible docs, surprisingly posted EPS (earnings per share) of $0.70, far surpassing analyst poll estimates of below $0.50 on average. This marked a sustainable recovery mood after a rather disappointing forecast at the end of May, which led to the stock's crash from above $350 to below $220 at the time. Right at the moment, a major multi-month resistance at $270 is broken by a more than 7.5% jump to the empty space above, with closing price reaching $290.79 on the last date of August. The coast looks clear, and the way to at least $350 looks open.
Current profit numbers not only look very nice when compared to financial results in the first half of 2023 (at nearly $0.56 per quarter), but also are on the way to repeating $0.86 to $0.93 records on quarterly results in the second half of 2023 after the failure at $0.51 in the first three reporting months of 2024. Meanwhile, the firm's revenue set a new record at $478 million vs $458 million six months ago to show a 12.8% surplus in implementing demand YoY. More importantly, looking ahead MongoDB foresees EPS of $0.65 to $0.68 for Q3, raising its 2025 guidance. An annual EPS for the next year is now expected between $2.33 and $2.47, much higher than the previous market consensus of $2.26, while the company's sales is now re-estimated to $1.92-1.93 billion, which is also 1.0% to 1.5% above the average expectations. However, a growing payback is the most remarkable part of the company’s forecast.
Large investment houses are citing consumption trends improved, operational headwinds subsided, and new business generation segments strengthened. As an example, Piper Sandler increased its price target for MongoDB to $335, with an Overweight rating, also feeling the strong "underlying demand" for the firm's services, and potentially doubling its revenue to between $4 billion and $5 billion over the next three to five years, when the current growth rate of Atlas is "three times faster than the rest of the database industry". Its customer base grew by over 1,500 new customers during the last quarter to reach the whole number of 50,700 business customers all over the world.
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