In a note to clients this week, Goldman Sachs reiterated a Buy rating and $70 price target on Gitlab Inc (NASDAQ:GTLB).
The firm said that demand stabilization would support the company's second-half growth, while pricing, generative AI, and its up-market opportunity underpin its FY25 potential.
GTLB reported earnings last week, Sept. 5, with the results better than expected. The software company topped consensus expectations for earnings and revenue, with guidance also topping estimates.
"Additional drivers for next year entail: 1) Conversion of free users to paid (after enforcing new user limits), 2) Pricing increases in its Premium tier and 3) Adoption of Gen-AI services expected to launch later this year at $9/user/month," the firm wrote.
"Coupled with the relative demand stabilization on a sequential basis and easing deal contraction activity, these results may ease investor concerns that more structural challenges are present while reaffirming our belief that GitLab will see growth recover when the demand backdrop improves."
Goldman Sachs contends GTLB is emerging as a "clear leader" in the fragmented DevOps market "driven by its full suite covering the stages in the entire SDLC market, ease-of-use, scalability, and focus on R&D and innovation."