GTLB - GitLab crashes 32% but BofA defends on 'conservative' guidance

2023-03-14 09:15:20 ET

GitLab ( NASDAQ: GTLB ) crashed 32% in premarket trading on Tuesday after the company issued weak fiscal 2024 guidance, prompting investment firm Bank of America to defend the DevOps company.

Analyst Koji Ikeda reiterated the firm's buy rating on GitLab ( GTLB ) shares, but lowered the per-share price target to $50 from $75, noting that the "conservative" guidance does not include any price increases, but is a "far ... stance" from the 40% growth figure the company's management had discussed just a few months ago.

"Therefore, it could take some time to regain investor confidence that the soft guidance is mainly macro/timing related versus a fundamental shift in the way the end-market consumes GitLab," Ikeda wrote in an investor note.

Ikeda added that the guidance for both revenue and profitability should likely lead to "beat-and-raises," assuming the global economy does not get worse.

Looking ahead to fiscal 2024, GitLab ( GTLB ) expects to generate sales between $529M and $533M, well below the $587.63M analysts were expecting. The company also expects to lose between 24 and 29 cents per share on an adjusted basis, compared to the 52 cent per-share loss analysts forecast.

Earlier this month, GitLab ( GTLB ) said it was raising the price of its premium level service for the first time in five years .

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