Street Calls of the Week
Investing.com - Macquarie downgraded GitLab Inc (NASDAQ:GTLB) from Outperform to Neutral and significantly reduced its price target to $40.00 from $70.00, representing a 43% decrease. The new target aligns closely with GitLab’s current trading price of $37.81, which is hovering just above its 52-week low of $37.90.
The downgrade reflects Macquarie’s increased concern about risks stemming from choppy execution at the DevOps platform provider, according to the research note issued Tuesday.
Macquarie also cited segment-specific market weakness and broader market dynamics as factors contributing to its more cautious stance on GitLab shares.
Despite the downgrade, Macquarie noted that GitLab’s current discount to peers could potentially provide opportunity for upside catalysts in the future.
These potential catalysts could stem from improvements in GitLab’s go-to-market strategy and product enhancements, according to the research firm’s analysis.
In other recent news, GitLab Inc reported third-quarter revenue of $244.4 million, marking a 24.6% year-over-year increase and surpassing analyst estimates. Despite this revenue beat, GitLab’s growth in customer remaining performance obligations showed a slowdown, contributing to mixed perceptions of its financial performance. Analysts have responded with various adjustments to their price targets for GitLab. BTIG lowered its price target to $52 while maintaining a Buy rating, and Wolfe Research adjusted its target to $50, keeping an Outperform rating. Truist Securities further reduced its target to $42, citing growth concerns, but maintained a Hold rating. Piper Sandler, however, reiterated its Overweight rating with a $70 price target, even as GitLab shares experienced a 9% drop following the earnings announcement. The decline in share price was attributed to a perceived conservative outlook and a decline in net revenue retention. Despite these concerns, GitLab maintained strong levels of new customer contributions from the previous quarter.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.