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Why did MongoDB stock boom today? Strong earnings and guidance

MongoDB (NASDAQ:MDB) shares surged more than 23% Wednesday as the database program provider reported strong third-quarter results and guidance, leading to praise from several Wall Street analysts.

Baird analyst Raimo Lenschow, who rates MondoDB (MDB) shares overweight and has a $240-a-share price target, noted the company's third-quarter results are likely to disprove most of the bearish themes surrounding the company and result in a "meaningful short squeeze."

"Arguably, not all is perfect as the quarter benefited from multi-year EA (Enterprise Advanced) contribution," Lenschow wrote in a research report. "Nonetheless, overall better Atlas consumption trends, healthy customer adds and much better profitability should drive investors back into the name as its status as a premium growth asset got confirmed."

Monness, Crespi, Hardt analyst Brian White, who has a neutral rating on MongoDB (MDB), noted the company is "well positioned" to benefit from next-generation databases and the tone of the call was upbeat, in part to its Enterprise Advanced segment.

"The tone of the call was upbeat with MongoDB experiencing big upside in Enterprise Advanced, while Atlas consumption trends improved in [the third-quarter]," White wrote. "Moreover, demand in the mid-market channel rebounded globally in [the third-quarter] and enterprise business trends improved in Europe.

New York-based MongoDB (MDB) said it earned 23 cents a share, excluding one-time items during the third-quarter, as revenue jumped 47% year-over-year to $333.62M. Analysts were expecting MongoDB (MDB) to lose 17 cents a share on $304.73M in revenue.

During the quarter, MongoDB (MDB) said Atlas-related revenue rose 61% year-over-year, while Enterprise Advanced accounted for $93M in sales, due in part to a higher number of multi-year deals signed during the quarter.

The company added that it had more than 39,100 customers for the period ending October 31.

Looking ahead, MongoDB (MDB) expects fourth-quarter revenue to be between $334M and $337M and its 2023 fiscal-year revenue to be between $1.257B and $1.26B.

Analysts had previously forecast the company's fourth-quarter revenue to reach $314.84M, and full-year sales of $1.21B.

Lenschow added that the fourth-quarter and full-year operating profit guidance also beat consensus, as the company is reigning in the growth of its expenses as a result of the global economic headwinds.

White raised his fourth-quarter earnings per share estimates in light of the company's commitment to reign in operating costs, as he now expects earnings of 41 cents a share, up from a prior view of 37 cents a share.

Late last month, KeyBanc Capital Markets started MongoDB (MDB) with an overweight rating, highlighting several positive factors for the cloud-database provider.