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On Tuesday, Goldman Sachs modified its outlook on GitLab Inc (NASDAQ:GTLB) by reducing the company’s price target from $88.00 to $80.00. Despite this adjustment, the firm maintained its Buy rating on the stock. According to InvestingPro data, 24 analysts have recently revised their earnings estimates upward, with price targets ranging from $60 to $90. The company maintains strong financial health with a current ratio of 2.57, indicating robust liquidity. Analysts at Goldman Sachs issued a statement after GitLab released its financial results, which demonstrated a 29% year-over-year increase in revenue, outperforming the consensus by 3%. The company also reported an operating margin (OpM) of 18%, which is an improvement of 400 basis points, and a free cash flow (FCF) margin of 29%, up by 900 basis points. InvestingPro analysis reveals an impressive gross profit margin of 89%, though the company is not yet profitable on a trailing twelve-month basis.
The adjustment in the price target came as GitLab’s stock increased by 2% in after-hours trading, as investors processed the company’s earnings beat, which was lower than the average, and its future growth guidance, which was slightly below expectations. For fiscal year 2026, GitLab forecasted a 24% growth, marginally under the consensus estimate of 25%.
Goldman Sachs analysts noted several factors that support their growth estimates of 26-27% for fiscal year 2026, including a stabilizing net expansion rate (NER), a record increase in calculated remaining performance obligations (cRPO), and a significant number of new deals above $100,000. These indicators, along with a record number of first-time orders exceeding $100,000, validate GitLab’s strategic focus on the mid-market and enterprise sectors.
GitLab’s strategy is concentrated on acquiring new paying customers, expanding existing customer relationships, and maintaining a rapid pace of innovation. Goldman Sachs believes that these areas present multiple opportunities for GitLab to exceed its growth expectations. The firm also highlighted GitLab’s competitive positioning, its best-of-breed Gen-AI products, and its focus on the upmarket segment as reasons for the company’s potential to meet its conservative guidance.
Finally, with GitLab’s shares currently trading at 8 times its expected CY26 sales, Goldman Sachs sees potential for the stock to align with its Rule of 40+ peers, which trade at an average of 9 times CY26 sales. This re-rating could provide an opportunity for the stock’s value to increase. For deeper insights into GitLab’s valuation and growth prospects, InvestingPro subscribers can access comprehensive research reports, real-time Fair Value calculations, and over 30 additional financial health indicators not covered in this analysis.
In other recent news, GitLab Inc reported strong financial results, with fourth-quarter revenue reaching $211.4 million, a 29.1% increase year-over-year, surpassing both BTIG’s estimate of $205.9 million and the consensus estimate of $206.2 million. The company’s guidance for fiscal year 2026 projects revenues of approximately $939 million, representing a 23.7% increase year-over-year, aligning closely with market predictions. GitLab’s Ultimate product tier showed significant traction, now accounting for 50% of the company’s total Annual Recurring Revenue (ARR), with a year-over-year increase of over 90%. Wolfe Research maintained an Outperform rating on GitLab, citing the company’s potential for high-20s growth this year, despite lowering its price target to $69.00 from $78.00. Truist Securities retained a Buy rating with a $90 price target, expressing confidence in GitLab’s ongoing momentum and successful business strategy execution. Meanwhile, Barclays (LON:BARC) raised its price target for GitLab to $165 from $145, maintaining an Equalweight rating, reflecting adjustments in the company’s estimated EBITDA for fiscal years 2025 and 2026. DA Davidson reiterated a Neutral rating with a $60 price target, aligning its estimates with GitLab’s guidance. BTIG also maintained a Buy rating and an $86 price target, highlighting strong fiscal fourth-quarter results and encouraging trends in large deal activities.
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