MongoDB Inc (NASDAQ:MDB) saw Bank of America raise its price target on the database software company ahead of its upcoming first quarter earnings report, citing continued confidence in demand trends and execution across its cloud and on-premise offerings.
Bank of America reiterated its ‘Buy’ rating and increased its price target to $375 from $350, above current levels of about $338.
The firm also raised its valuation multiple to 8.9x enterprise value to calendar year 2027 estimated revenue, up from 8.3x previously, reflecting what it described as “higher execution confidence.”
The analysts expect MongoDB to post “good results” and added that they “haven’t detected any slowdown in demand,” particularly for Atlas, the company’s cloud database platform, and Enterprise Advanced (EA), its on-premise database offering.
Bank of America expects that Atlas growth will likely remain a key focus for investors. In MongoDB’s prior quarter, Atlas revenue grew 29% year over year, or roughly 30% on a normalized basis, slightly below the 30% growth reported in the previous quarter.
The firm noted that Atlas has exceeded Wall Street expectations over the last three quarters, and said applying the recent average level of upside would imply fiscal first-quarter Atlas revenue of about $513 million, representing approximately 30% growth year over year.
Analysts wrote that level of performance “could be a catalyst” for the stock if achieved.
The firm also highlighted investor interest in MongoDB’s Enterprise Advanced segment, which has contributed to both growth upside and debate in recent years. Bank of America believes that MongoDB’s continued investment in its on-premise database products could position the company to benefit as enterprises increasingly adopt hybrid cloud models rather than relying entirely on public cloud infrastructure.
“This is because disruptive on-premise database offerings are attractively positioned to take share of enterprise workloads,” the analysts wrote, adding that it is becoming “increasingly evident that more enterprise work will likely be done in hybrid models versus 100% in the cloud.”
The firm said investors will likely be watching for updates on product enhancements, adoption trends, and enterprise workload migration during the earnings call.
In addition, Bank of America said it expects investors to focus on MongoDB’s role in the growing AI software ecosystem. The analysts said broader adoption of AI applications could increase demand for MongoDB as a foundational database platform.
“As MongoDB becomes more entrenched in the AI ecosystem it should result in it being picked more often as the foundational database for new AI applications,” the analysts wrote.
MongoDB will report its Q1 earnings on May 28.