Street Calls of the Week
On Tuesday, Wolfe Research adjusted its price target for GitLab Inc (NASDAQ:GTLB) shares, reducing it to $69.00 from the previous $78.00, while continuing to recommend the stock as Outperform. According to InvestingPro data, the stock is currently trading near Fair Value, with analysts maintaining targets ranging from $60 to $90. Despite a challenging month for the stock, which has declined by 7.48%, 24 analysts have recently revised their earnings expectations upward for the upcoming period. The firm’s analysts noted that GitLab delivered fourth-quarter results that exceeded expectations on all key metrics, ending the year on a strong note. Additionally, the company’s guidance for fiscal year 2026 revenue aligns with consensus estimates on a dollar basis.
GitLab announced the appointment of a new Chief Revenue Officer (CRO), Ian Steward, formerly of Tricentis. This leadership change comes as the company reports a 29% increase in total revenue for the quarter, outperforming its guidance by 2.5%. InvestingPro analysis reveals the company’s impressive 89% gross profit margin and strong financial position, with liquid assets exceeding short-term obligations. Get access to 8 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription. The growth was primarily driven by the enterprise segment, with the company securing its largest deal ever and a record number of customers with annual recurring revenue (ARR) over $100,000, including unprecedented first orders in this category.
The company’s Ultimate product now accounts for half of its ARR, up from 48% in the previous quarter, with the top seven deals of the quarter involving expansions of this tier. GitLab Dedicated, another product offering, grew approximately 90% year-over-year, marking the company’s largest initial order for a dedicated deal.
Despite a slight decrease in the dollar-based net retention rate (DBNR) to 123% from 124% in the previous quarter, the company’s profitability stood out. The operating margin reached 17.7%, a significant year-over-year increase of 960 basis points and 3.9 percentage points higher than guidance. The revenue guidance for the first quarter and full year of fiscal 2026 met consensus estimates, while operating margin guidance for the full year was also in line, with a better outlook for the first quarter due to a non-recurring expense from the previous year.
Wolfe Research commented on the mixed nature of the fourth-quarter performance, with revenue outperformance slightly decreasing, yet the revenue guidance for the coming year being more favorable than anticipated. The firm reiterated its Outperform rating for GitLab, despite lowering the price target, citing the potential for high-20s growth this year and the stock’s value compared to its growth-oriented peers. With a market capitalization of $9.13 billion and a strong 32% year-over-year revenue growth, GitLab continues to demonstrate robust fundamentals. For deeper insights into GitLab’s valuation and growth prospects, access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, GitLab Inc has reported impressive financial results, with a 29% year-over-year revenue increase in the fourth quarter, surpassing several analysts’ expectations. The company’s fiscal year 2026 revenue guidance projects approximately $939 million, reflecting a 23.7% increase year-over-year. Analyst firms have responded to these developments with various ratings and price targets. BTIG maintained a Buy rating with a target of $86, noting GitLab’s strong financial performance and encouraging trends in its premium Ultimate tier. Truist Securities also upheld a Buy rating, setting a $90 target, citing GitLab’s robust performance and potential for continued growth. Meanwhile, Barclays (LON:BARC) raised its price target to $165 while maintaining an Equalweight rating, reflecting their revised EBITDA estimates for the coming years. Mizuho (NYSE:MFG) Securities adjusted its price target to $72, maintaining an Outperform rating, and highlighted GitLab’s growth prospects and strong demand for its products. DA Davidson kept a Neutral rating with a $60 target, acknowledging GitLab’s growth in its Ultimate tier and increased customer base. These recent developments underscore GitLab’s ongoing momentum and varied analyst perspectives on its future trajectory.
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