After Earnings, Is MongoDB Stock a Buy, a Sell, or Fairly Valued?

MongoDB MDB released its fourth-quarter earnings report on March 5. Here’s Morningstar’s take on MongoDB’s earnings and stock.

Key Morningstar Metrics for MongoDB

• Fair Value Estimate: $222.00
• Morningstar Rating: ★★★
• Economic Moat: None
• Morningstar Uncertainty Rating: High

What We Thought of MongoDB’s Q4 Earnings

• MongoDB reported solid fourth-quarter results, exceeding our estimates on the top and bottom line, but the fiscal 2026 outlook was well below expectations.
• The company guided for a fiscal 2026 growth of only 13%, while consensus was looking for growth of closer to 17%, and our expectations were even higher at 20%.
• The soft outlook incorporated weaker non-Atlas revenue expectations due to fewer multiyear license renewals, and given non-Atlas revenue accounted for 30% of revenue in the most recent year, it is a worrying sign that the company is seeing material limitations in growth in this area.
• Further, the additional investments in marketing, combined with a deceleration in growth in Atlas revenue, which we estimate will likely only be up 21% to 22% in fiscal year 2026 compared with growth of 27% in the previous year, are additional worrying signs.
• In response to earnings, we lowered our fair value estimate to $222 per share from $290. With shares bottoming at $180, we see some undervaluation emerging, even with the poor results.

Fair Value Estimate for MongoDB

With its 3-star rating, we believe MongoDB stock is fairly valued compared with our long-term fair value estimate of $222 per share, which implies forward fiscal-year enterprise value/sales of 7 times. We project that MongoDB will achieve a compound annual growth rate of 16% over the next five years. We expect this substantial growth to be driven by continued shifts of workloads to a cloud environment, prompting the database market to grow robustly.

We also expect MongoDB to take some share. We forecast that the firm’s gross margins will gradually expand as it gains scale, and we also expect scale to emerge for research and development, sales, and administrative expenses as well. We expect GAAP operating margins to increase from negative 11% in fiscal 2025, turning positive in 2030 and reaching 25% by fiscal 2035.

Read more about MongoDB’s fair value estimate.

Economic Moat Rating

We do not assign MongoDB a moat. In general, we view the infrastructure SaaS space as fairly competitive. The company is still in its high-growth customer acquisition phase and is unprofitable. It is difficult to discern with a high degree of certainty what the ultimate margin profile and returns on invested capital will be 10 years from now.

Read more about MongoDB’s economic moat.

Financial Strength

We think MongoDB is financially stable and its balance sheet is sound, with adequate cash balances and reasonable debt levels. The company already generates positive free cash flow, though it’s driven by heavy use of stock-based compensation. We think MongoDB is rightly avoiding dividends and major share repurchases, as the company is in its growth phase.

Read more about MongoDB’s financial strength.

Risk and Uncertainty

We assign MongoDB a High Uncertainty Rating due to its place in a technological landscape that can shift rapidly, where the firm is in its lifecycle, and the looming threat of competition. Database and technology needs change over time, and MongoDB must continually innovate to maintain an edge. The competitive landscape could also change, as new companies emerge or cloud providers improve their offerings in the space. Finally, MongoDB is still early in its lifecycle. All this increases uncertainty when predicting future growth and margin profiles.

Read more about MongoDB’s risk and uncertainty.

MDB Bulls Say

• There are long-term tailwinds in the data space in general, which could fuel growth for MongoDB.
• If MongoDB can figure out how to monetize features that fit with the AI demand boom, it could be another growth driver.
• MongoDB could expand to other multicloud data needs, or become a part of the emerging AI tech stack, pushing spending per customer higher and improving revenue growth.

MDB Bears Say

• MongoDB’s growth profile could be worse than expected. If MongoDB can’t reaccelerate growth in fiscal 2026 after a slower 2025, the current valuation seems too rich and there could be significant downside.
• The space is increasingly competitive, and there are other offerings in the marketplace, both from the public cloud providers and independent providers.
• There is still a lot of uncertainty about how much revenue attributable to AI MongoDB will ultimately generate.

This article was compiled by Gautami Thombare.