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GitLab upgraded to Outperform at Wolfe amid ‘significant upside from pricing’

GitLab upgraded to Outperform at Wolfe amid 'significant upside from pricing' © Reuters. GitLab (GTLB) upgraded to Outperform at Wolfe amid ‘significant upside from pricing’

Wolfe Research analysts upgraded GitLab (GTLB) to Outperform with a price target of $75, the broker revealed in a Tuesday note to clients.

The move comes following the company’s fiscal Q4 2024 report, which sent its shares tumbling more than 20%. Despite that, Wolfe sees GTLB as “potentially being one of the fastest growers in software this year with multiple product catalysts and significant upside from pricing.”

“The best part is now you can have all this at a relative discount (9% vs. peers on base case estimates) instead of a premium, making the risk reward attractive,” analysts wrote.

GTLB shares rose 2.8% in premarket trading Wednesday.

Wolfe observed notable improvements in buying behavior from GitLab’s fourth fiscal quarter compared to its third.

Notably, enterprise customers’ purchases exceeded expectations, and both churn and contraction showed improvement for the fourth consecutive quarter in a row. The impressive Q4 2024 cRPO bookings, amounting to $222 million (a 46% year-over-year increase compared to 32% and 20% in the third and second quarters, respectively), heighten anticipation for the first fiscal quarter of 2025.

This period is expected to serve as “the next catalyst for shares,” analysts said.

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