Tech Favorite MongoDB May Have Room to Run Even After a 129% Rally

(Bloomberg) -- Traders are digging in on what seems to be technology’s latest gem: MongoDB Inc. But the New York-based database-software company is more than its 129 percent rally this year. So what’s the secret sauce?

“They have a different architecture, and that’s what’s really fueling their business,” Needham analyst Jack Andrews said in an interview. Shares are extending the record, rising as much as 2.7 percent to $68.24 intraday.

Andrews, who became the first analyst to announce coverage of the stock last October, applauds MongoDB’s open-source software, which has made it popular with the application developer community. The good part, Andrews believes, is its flexibility to be run both in a data center and in the cloud. (Needham’s initial hold rating on the stock became a buy in February, and Andrews said he plans to revisit his $57 price target ahead of earnings in early September.)

MongoDB is gaining traction with hedge funds. Several investors this month disclosed new or larger stakes in the company, including activist Corvex Management, Davidson Kempner Capital Management and Columbus Circle Investors. In the second quarter, Whale Rock Capital Management also added more than 3 million shares to become one of the company’s top holders.

Even more unique, Andrews says, is the company’s latest update in June, which enables it to handle ACID transactions -- a computer science acronym for atomicity, consistency, isolation and durability. This allows enterprise businesses to properly store their data given unforeseen events like power outages or other errors.

MongoDB joins the ranks of other recently listed technology companies Spotify Technology SA and Dropbox Inc. that have outperformed peers. It’s “still very early days,” though, Andrews said, noting it’s the first database company to become publicly traded in over twenty years.

In his view, MongoDB could become a very large company over time, relative to the size of the market.

To contact the reporter on this story: Kamaron Leach in New York at kleach6@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Morwenna Coniam, Jeremy R. Cooke

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