Street Calls of the Week
Investing.com - GitLab Inc (NASDAQ:GTLB) shares jumped approximately 10% following an unsubstantiated report that Datadog (NASDAQ:DDOG) could be exploring a takeover bid for the company. The developer operations platform, currently valued at $8.05 billion, maintains strong financial fundamentals with an impressive 88.52% gross profit margin.
The report, published by Street Insider, claims Datadog is working with bankers to evaluate a potential acquisition of GitLab, though the information remains unconfirmed by either company. InvestingPro data shows GitLab holds more cash than debt on its balance sheet, making it an attractive acquisition target. Subscribers can access 10+ additional ProTips and comprehensive financial analysis in GitLab’s Pro Research Report.
This marks the second time in recent months that acquisition rumors have surrounded GitLab, following a similar unsubstantiated report in July 2024 that also named Datadog as a potential suitor.
Datadog shares fell approximately 5% following the circulation of the takeover speculation.
RBC Capital maintained its Outperform rating and $58.00 price target on GitLab, noting the company "could make sense as an acquisition candidate or as a long-term standalone asset."
In other recent news, GitLab Inc. reported a 29% increase in revenue for its fiscal second quarter, surpassing consensus estimates by 4%. Despite this strong performance, FBN Securities lowered its price target for GitLab to $65.00 from $75.00, while maintaining an Outperform rating, citing mixed results. The company also posted remaining performance obligations of $988.2 million, marking a 32% year-over-year growth, though this was below FBN’s 37% growth estimate. In terms of leadership changes, GitLab appointed James Shen as interim Chief Financial Officer following the departure of Brian Robins, who is joining Snowflake. Shen has been with GitLab since January 2021 as Vice President of Finance. Wells Fargo initiated coverage on GitLab with an Equal Weight rating, pointing to a challenging near-term outlook due to changes in the company’s go-to-market strategy. Meanwhile, RBC Capital reiterated its Outperform rating with a price target of $58.00, expressing confidence in GitLab’s strategic adjustments and new product offerings. These developments reflect a period of transition and strategic realignment for GitLab.
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