Rosenblatt Raises MongoDB (MDB) Price Target Despite Atlas Growth Concerns

On September 2, Rosenblatt raised its price target on MongoDB, Inc. (NASDAQ:MDB) from $395 to $445 while maintaining a Buy rating. This update came after the company reported its second-quarter fiscal 2027 results. The company delivered stronger-than-expected revenue growth, improved profitability and raised its full-year outlook.

MongoDB, Inc. (NASDAQ:MDB) reported second-quarter revenue growth of 30%, surpassing both Rosenblatt's estimate and consensus expectations by about 5%. However, the stock declined more than 12% in pre-market trading following the results, as investors focused on the pace of growth in the company's Atlas cloud business.

The company's Atlas business grew 29% year-over-year and accounted for 73% of total revenue, with its run-rate surpassing $2 billion. This growth was ahead of Rosenblatt's estimate of 26%. MongoDB, Inc.'s (NASDAQ:MDB) non-Atlas on-premise business grew 36% year-over-year.

Customer growth also remained strong as the company added a record 2,900 customers in the second quarter. The number of Voyage customers nearly doubled from the previous quarter. MongoDB, Inc. (NASDAQ:MDB) also reported a non-GAAP operating margin of 24%, up significantly from 15% a year ago, to beat Rosenblatt's estimate of 21%.

The company nearly doubled its free cash flow year-over-year to $137.6 million, further highlighting the improvement in the financial performance. MongoDB, Inc. (NASDAQ:MDB) also lifted its fiscal 2027 revenue outlook by about 2% to a range of $2.99 billion to $3.03 billion, compared with the previous estimate of $2.96 billion. The company expects its operating margin to be around 21%.

Bear Case: Investors Expected Faster Atlas Growth

Despite the strong quarterly results and higher guidance, the stock fell sharply after the earnings report. CEO Chirantan "CJ" Desai said he was "surprised" and "disappointed" by the stock's decline, arguing that MongoDB, Inc. (NASDAQ:MDB) had delivered a strong quarter and raised its outlook despite concerns about Atlas growth.

Mizuho Securities analyst Jordan Klein pointed out that major hedge funds had privately expected Atlas revenue growth of between 30.5% and 31%. Klein also noted that shares had gained 21.3% in the past month, leaving little room for disappointment. The company's reported 29% growth appears to have fallen short of some of the expectations already reflected in the stock.

Desai defended Atlas' performance and said that the business continues to grow and add significant revenue. He said the main question for investors is when Atlas growth will begin to accelerate, adding that "it's not if, it's just when."