MongoDB 2019 Stock Forecast: Bullish Outlook with 25% Upside

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MongoDB Inc Forecast 2019

One tech stock investors should keep a close watch on in 2019 is MongoDB Inc (NASDAQ:MDB). The company’s share price has been on a tear since it went public in late 2017 and the stock forecast for MongoDB remains very bullish in 2019, with a price target of around $110.00 per share. Currently trading at $79.54, that price target would represent a full-year gain of 38.3%.

2018 was a record year of sorts for the stock market; just not the kind of record investors were looking for. The S&P 500 ended 2018 down 6.5% while the tech-heavy Nasdaq lost 4.3% of its value. It was the worst year for stocks since 2008 and the worst December on Wall Street since the Great Depression, with tech stocks ending a nine-year winning streak. That said, investors and analysts are upbeat for 2019, with many believing tech stocks will be the sector to beat in 2019.

To that end, MDB’s share price advanced an eye-watering 179% in 2018, making it one of the biggest tech winners of the year. The company posted strong, better-than-expected, double-digit revenue growth in the third quarter and provided robust guidance for the fourth quarter and fiscal 2019.

Admittedly, no one expects MDB’s share price to make the same kind of moves in 2019, but with the broader market expected to advance just 10% in 2019, an upward move of 25% would still be something to celebrate.

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MongoDB Inc

MongoDB is a general purpose database platform that helps brands support bigger data sets. Why is that important? At a basic level, social networks, e-commerce, and the Internet of Things collect customer data (names, addresses, e-mails, transaction history etc.). These data sets are analyzed and used to create personalized experiences for current customers and attract new customers.

Today, more and more brands are storing more and more data and accessing it at higher and higher rates. Applications that use a single server will eventually hit a scaling limit. MongoDB scales by adding more servers. This flexibility allows companies to add more capacity whenever they want. (Source: “What is MongoDB?” MongoDB Inc, last accessed January 10, 2019.)

In addition to being flexible, MongoDB’s databases are open-source, meaning developers can build brand-specific applications on top of them. Open-source also means free, which is not what investors like to hear. But the company does charge for premium features and services. And being free led to the wide adoption of its products among developers in a very short period of time.

The New York City-based company has more than 8,300 customers in over 100 countries. MongoDB’s data platform has been downloaded more than 45 million times and there have been more than one million “MongoDB University” registrations.

The company offers “MongoDB Enterprise Advanced,” a subscription package for enterprise customers; “MongoDB Atlas,” a cloud-hosted database-as-a-service solution; and “Community Server,” a free-to-download version of its database, which includes the functionality that developers need to get started with MongoDB. It also provides professional services, such as consulting and training.

MongoDB Financials

On December 4, 2018, MongoDB announced its financial results for the third quarter of fiscal 2019 ended October 31, 2018. Thanks to the continued adoption of its database platforms, MDB was once again able to report strong revenue growth. (Source: “MongoDB, Inc. Announces Third Quarter Fiscal 2019 Financial Results,” MongoDB Inc, December 4, 2018.)

Third-quarter revenue came in at $65.0 million, a 57% increase over the $41.5 million recorded in the same prior-year period. Subscription revenue was $60.1 million, a year-over-year increase of 65%. Services revenue of $4.9 million represents a 36% gain year-over-year. Revenue from Atlas soared by more than 300% and now accounts for 22% of total revenue, compared to only eight percent a year ago.

Gross profit was $47.2 million. This represents a 73% gross margin, consistent with the year-ago period.

MongoDB reported a third-quarter net loss of $31.3 million, or $0.59 per share (based on 52.7 million weighted-average shares outstanding). In the third quarter of 2017, MongoDB reported a net loss of $24.2 million, or $1.39 per share (based on 17.4 million weighted-average shares outstanding).

As of October 31, 2018, MongoDB had $522.7 million in cash, cash equivalents, short-term investments, and restricted cash. During the three months ended October 31, 2018, MongoDB used $7.6 million of cash in operations and $2.1 million in capital expenditures, leading to negative free cash flow of $9.7 million, compared to negative free cash flow of $10.4 million in the year-ago period.

“MongoDB delivered terrific third quarter results that reflect our growing position as the modern database platform of choice,” said Dev Ittycheria, President and Chief Executive Officer of MongoDB.

“We are seeing strong demand internationally and from customers in traditionally conservative markets and industries, which reflects our opportunity to continue generating strong growth.” (Source: Ibid.)

Looking ahead, MongoDB revised its full-year guidance upward, to a range of $243.7 million to $244.7 million. In the second quarter, the company forecasted full-year revenue of $229.0 million. It also expects to report a full-year net loss of $1.53 to $1.52 per share. This is an improvement over the $1.64-per-share loss expected last quarter.

MongoDB Stock Analysis for 2018

MongoDB’s strong momentum in 2018 was fuelled by strong revenue growth that came as a result of a number of new customer wins. The company entered 2018 trading at $29.83 and ended the year at $83.74.

While most of the market, and especially the tech sector, swooned during the October meltdown, MongoDB shrugged it off in short order. In fact, MongoDB went on to hit a new 52-week high of $93.23 on December 7.

Chart courtesy of StockCharts.com

MDB stock continues to have excellent momentum. There is ongoing speculation that it will revise its guidance for fiscal-year 2019 higher should this momentum continue throughout the year.

This Is Why MongoDB Could Reach $110.00 in 2019

MDB stock’s meteoric rise since going public in October 2017 may slow down in 2019, but it appears as though it’s going to continue to beat the markets. This is because it continues to report strong revenue growth and win over both traditional and conservative customers.

And building its customer base is what it’s all about. In the third quarter, MongoDB’s $65.0 million of quarter revenue exceeded the high end of its own guidance. It also ended the quarter with more than 8,300 customers, a year-over-year increase of 69%. (Source: Ibid.)

In the second quarter, total revenue was up 61% year-over-year at $57.5 million, the company had over 7,400 customers on July 31, 2018—up 72% year-over-year. In the first quarter, total revenue increased 49% year-over-year to $48.2 million, the company’s number of customers was up 83% year-over-year at more than 6,600. (Source: “MongoDB, Inc. Announces Second Quarter Fiscal 2019 Financial Results” and “MongoDB, Inc. Announces First Quarter Fiscal 2019 Financial Results,” MongoDB Inc, September 5, 2018 and June 6, 2018.)

The company’s customer wins are coming from all sectors. Despite being a young company, MongoDB now counts Her Majesty’s Revenue and Customs (HRMC)—the U.K. version of the IRS—as a client. The company has also won over other large government institutions in Italy and the Maryland Health Benefit Exchange.

The company has a strong track record, and even though it has a market cap of $4.24 billion, plenty of room to grow. The global database market totaled $44.9 billion in 2016 and is expected to hit more than $63.0 billion by 2020. It’s only going to get bigger from there.

Thanks to the growing adoption of MongoDB’s database platform and soaring revenue, there is plenty of reason to get excited about the company’s potential in 2019. A 38.3% move to the upside, which would put the company’s share price at $110.00, is not out of reach. It could, if history is any indicator, be a conservative estimate.

Analyst Take

Should investors consider MongoDB for the long term? MongoDB is a tech stock in a unique position. It’s announcing large customer wins and reporting strong double-digit revenue growth. This has translated into strong stock market gains. While other tech stocks are trying to rebound from the October 2018 sell-off, MongoDB is already hitting new highs.

The company reported better-than-expected third-quarter results, which was fueled, in large part, by its new customer wins. It was also MongoDB’s 15th consecutive quarter of 120%+ net revenue expansion with current customers.

The company also revised its full-year revenue guidance significantly higher and narrowed the expected net loss.

For all of these reasons, investors might want to consider putting MongoDB on their radar in 2019.

Check out the original article here.
Author: John Whitefoot, BA

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