MongoDB (MDB Quick QuoteMDB - Free Report) shares have lost 37.6% in the trailing 12 months, underperforming the Zacks Computer and Technology sector’s appreciation of 27.8% and the Zacks Internet – Software industry’s return of 30.7%.

MDB shares have also lagged industry peers like Bill Holdings (BILL Quick QuoteBILL - Free Report) and Domo over the same time frame. While BILL shares have appreciated 18.4%, Domo shares have lost 26.6% over the trailing 12 months.

MongoDB’s sharp stock price decline can be attributed to macroeconomic headwinds, slower-than-expected modernization of AI applications and lower progress in legacy modernization efforts.

Heightened competition in the database market has weighed on customer acquisition and growth.

One-Year Performance

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MDB shares are not so cheap, as suggested by its Value Score of F. In terms of the forward 12-month price/sales, MDB is currently trading at a premium of 8.18X compared with the industry’s 2.97X.

Price/Sales Ratio (F12M)

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Despite these challenges, MongoDB continues to make strategic investments in enterprise channel expansion and AI-related technologies and innovation, aiming to position itself for long-term growth.

But do these initiatives make the stock a Buy? Let us dig deep to find out.

MongoDB Offers Positive Outlook for FY25

For the fourth quarter of fiscal 2025, MDB expects revenues of $515-$519 million. Non-GAAP income from operations is anticipated between $55 million and $58 million. Non-GAAP earnings are expected between 62 cents and 65 cents per share.

For fiscal 2025, MDB expects revenues of $1.973-$1.977 billion. Non-GAAP income from operations is likely between $242 million and $245 million.

Non-GAAP earnings are expected between $3.01 and $3.03 per share.

The Zacks Consensus Estimate for MDB’s fourth-quarter fiscal 2025 revenues is pegged at $517.5 million, indicating growth of 13.01% on a year-over-year basis.

The consensus mark for fourth-quarter fiscal 2025 earnings is pegged at 64 cents per share, unchanged over the past 30 days. The estimate indicates a year-over-year decline of 25.58%.

The Zacks Consensus Estimate for MDB’s fiscal 2025 revenues is pegged at $1.98 billion, implying growth of 17.39% on a year-over-year basis.

The consensus mark for fiscal 2025 earnings is pegged at $3.03 per share, up 2.02% over the past 30 days. The estimate suggests a year-over-year decline of 9.01%.

MDB beat the Zacks Consensus Estimate for earnings in the trailing four quarters, the average surprise being 58.78%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Robust Product Portfolio Aids MDB’s Prospects

MongoDB’s prospects are strengthened by its strong product innovation, strategic investments and the growing adoption of its platform for modern workloads. MDB is benefiting from robust Atlas growth, which accounted for 68% of total revenues in the third quarter of fiscal 2025.

Atlas’s developer-friendly platform, coupled with advanced capabilities like Atlas Vector Search, has made it a preferred choice for modern data management.

The launch of MongoDB 8.0, touted as the company’s fastest and most efficient version yet, along with the introduction of Atlas Flex, is enhancing performance and scalability. These innovations are catering to evolving customer needs, solidifying MongoDB’s competitive edge in the database market.

Rich Partnerships & Expanding Client Base Bode Well for MDB

MongoDB’s extensive partner ecosystem and growing client base highlight its strong market position and innovative capabilities. MDB’s rich partner network includes leading global organizations like McKinsey, Capgemini and Meta Platforms (META Quick QuoteMETA - Free Report) , which MDB utilizes to drive adoption and enhance its market position.

MongoDB’s client base spans diverse industries, featuring prominent names such as Victoria’s Secret, Paylocity Holding (PCTY Quick QuotePCTY - Free Report) and Tealbook. Victoria’s Secret has modernized its e-commerce platform with MongoDB Atlas to improve performance, resilience and a seamless customer experience.

Paylocity has transitioned from a traditional SQL-based solution to MongoDB, significantly reducing costs while speeding up development timelines from weeks to mere minutes.

Tealbook has consolidated its tech stack with MongoDB, resolving scalability and search inconsistencies, and optimizing its supplier intelligence platform. These successful implementations highlight MDB’s ability to empower organizations with cost-efficient, scalable and high-performance solutions tailored to their needs.

Here’s Why You Must Buy MongoDB Stock

To strengthen its market position, MDB is intensifying its focus on enterprise accounts, fostering deeper relationships via strategic investments. Initiatives such as targeted developer education and expanded professional services are accelerating legacy application modernization. This is expected to boost its top-line growth.

With its robust innovation, strategic partnerships and growing client base, MongoDB is well-positioned to overcome current challenges and deliver long-term value.

MDB’s strong growth prospects justify its premium valuation.

MongoDB currently has a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.