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MongoDB stock maintains neutral rating from MCH amid AI revenue doubts

EditorEmilio Ghigini
Published 05/28/2024, 08:02 AM
© Reuters.

On Tuesday, Monness, Crespi, Hardt maintained a neutral stance on MongoDB (NASDAQ: NASDAQ:MDB) stock, following the company's acknowledgment that generative AI may not significantly contribute to its revenue in the upcoming fiscal year.

MongoDB, during its fourth-quarter earnings call for fiscal year 2024, indicated that despite the initial excitement, generative AI is unlikely to become a major revenue source in FY25. This is attributed to customers still being in the experimental phase of developing generative AI applications.

MongoDB's conservative forecast for FY25 includes sales ranging between $1.90 billion and $1.93 billion, with an operating profit between $186 million and $201 million, and earnings per share (EPS) anticipated to be between $2.27 and $2.49.

The company's projection comes at a time when the broader enterprise software industry is grappling with the reality that last year's high expectations for generative AI have not translated into substantial revenue growth.

In contrast to MongoDB's own projections, Monness, Crespi, Hardt projects a more optimistic outlook for the company's second quarter of FY25, estimating sales of $527.2 million, which represents a 24% increase, and significantly higher than the Street's estimate of $470.4 million. Additionally, the firm forecasts EPS at $1.07, almost double the Street's expectation of $0.58.

For the full fiscal year 25, the firm's projections are also more bullish, with anticipated sales of $2.16 billion, marking a 28% increase. They also forecast an operating profit of $401.2 million, and an EPS of $4.41, which notably exceeds MongoDB's own earnings guidance.

Despite the tempered expectations regarding generative AI's immediate impact on MongoDB's revenue, Monness, Crespi, Hardt's analysis suggests a more robust financial performance than the company's guidance indicates. However, the firm's neutral rating reflects the uncertainty surrounding the monetization of generative AI within the enterprise software sector.

InvestingPro Insights

As Monness, Crespi, Hardt maintains a neutral stance on MongoDB (NASDAQ: MDB), it's worth considering some key financial metrics and analyst insights from InvestingPro. MongoDB's market capitalization stands at a solid $25.65 billion, reflecting significant investor confidence. While the company's P/E ratio is currently negative at -140.26, indicating that it is not profitable as of the last twelve months ending Q4 2024, analysts predict a turnaround with expectations of growth in net income this year.

An optimistic sign for investors is MongoDB's liquid asset position, which surpasses its short-term obligations, suggesting a strong liquidity profile. Moreover, the company operates with a moderate level of debt, which could provide flexibility for future growth and investment. Revenue growth also remains robust, with a 31.07% increase over the last twelve months as of Q4 2024, showcasing the company's ability to expand its sales.

For those considering a deeper analysis, InvestingPro offers additional InvestingPro Tips for MongoDB, including insights on valuation multiples and profitability predictions. For a limited time, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to these valuable tips and more. With 6 additional tips available on InvestingPro, investors can gain a comprehensive understanding of MongoDB's financial health and market potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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