MongoDB Sees Strong Close to the Year but Difficult Path Ahead; FVE Down to $335

No-moat MongoDB’s fourth quarter was impressive amid ongoing macroeconomic headwinds, with revenue and non-GAAP earnings per share both above our expectations. However, guidance for the first quarter and full year was significantly below our previous forecasts as a result of its cloud platform, Atlas, being materially affected by a difficult macroeconomic environment. Given the disappointing top-line outlook, we have tempered our growth expectations for MongoDB and are lowering our fair value estimate to $335 per share from $360, even with rolling our model forward. With after-hours shares trading at $206, down around 10%, we view shares as undervalued. Despite our lowered growth expectations, we still maintain our long-term thesis that MongoDB is partially insulated from macroeconomic uncertainty due to its mission-critical product resulting in very little churn. Additionally, we view the market as undervaluing the size of the database management market and believe MongoDB still has a significant growth runway.