MongoDB stock gained Monday after analysts at Guggenheim upgraded stock to a buy rating from neutral, after the once hot AI stock suffered a rough 2024.
Guggenheim analyst Howard Ma wrote in a client note that "MongoDB seems more like the ugly duckling in infrastructure software as of late than the soaring eagle it's long been." But he sees reason for optimism. He set a price target of 300 for shares of the database software company, implying roughly 22% from MongoDB's closing price Friday.
After the stock slumped 30% following MongoDB's earnings report last month, Ma said investors concerns have become "overblown."
"We're not assuming MongoDB soars like an eagle again, but rather gracefully maneuvers the future while giving investors balanced growth and expanding margin," Ma wrote. "We believe that should be enough for shares to outperform on a relative basis."
On the stock market today, MongoDB stock gained 2.6% to close at 252.86. Shares also broke a sharp downward trend with two days of gains to open 2025 on Thursday and Friday.
MongoDB Stock 2025 Preview
Investors pushed MongoDB stock lower in the final weeks of the year, despite the company posting fiscal Q3 earnings and sales results that beat estimates overall on Dec. 9.
The bear case for MongoDB, Ma wrote, is that the cloud consumption revenue growth from its Atlas software product has decelerated while non-Atlas parts of the business have performed better. Meanwhile, Ma added, the company's "well-respected" Chief Financial Officer, Michael Gordon, is stepping down at the end of this month.
But Ma offered a couple counterpoints that could prove more bullish for the company.
"Atlas consumption trends have been stable, and by our measure of new annual recurring revenue (that is, incremental year-over-year consumption), in fiscal Q3 accelerated modestly vs. fiscal Q2 as measured on a 2-year stack," Ma wrote. "Our most recent channel check indicates that Q4 consumption accelerated vs. Q3, and assuming stable consumption in fiscal year 26, we see Atlas accelerating to 29% growth vs. more than 27% in FY25."
Further, Ma said MongoDB is investing in its Enterprise Advanced offering and a "run anywhere" strategy that can "meet demand for running both core business apps and new AI workloads in hybrid environments."
MongoDB's Weakened Relative Strength
Even with gains to start the year, MongoDB remains well below its 21-day and 50-day averages, according to IBD MarketSurge. The shares have a dismal Relative Strength rating of 17, down from an impressive 92 a year ago.
MongoDB stock has an IBD Composite Rating of 34 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
