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Investing.com -- Rosenblatt started coverage of GitLab with a Buy rating and a $58 price target given company’s strong positioning in the evolving software development landscape and emerging opportunities tied to generative AI.
Analysts see GitLab benefiting from both the increasing complexity of application development and the widespread adoption of AI-assisted coding.
While generative AI may commoditize parts of the coding process, Rosenblatt argues it ultimately drives more code creation, benefiting platforms like GitLab that manage the full software development lifecycle.
The firm also flagged meaningful upside from GitLab’s push to upsell its higher-tier “Ultimate” plans and expand adoption of new AI-based add-on products.
Only about a quarter of GitLab’s paying users are currently on Ultimate, leaving room to grow recurring revenue across its 10,000-plus customer base.
Margins are also expected to expand meaningfully, with adjusted operating margin projected to reach the mid-teens next year and longer-term targets above 30%.
Rosenblatt expects GitLab to generate $939 million in revenue in fiscal 2026, up 24% year-on-year, and sees non-GAAP earnings of $0.75 per share.
The $58 price target implies a 36% return and values the stock at 7.8 times estimated FY27 revenue.
“We believe GitLab has established itself as one of the two leading providers of comprehensive software development platforms, with over 30m registered users, and has broadened into many adjacent areas and additional personas, just in time to make the Company robust (and perhaps even anti-fragile) to the AI wave,” analysts at Rosenblatt said.