ORCL - GitLab gains as BTIG calls it 'compelling' DevOps play

2023-11-13 12:54:16 ET

GitLab ( NASDAQ: GTLB ) shares rose fractionally on Monday as investment firm BTIG started coverage on the DevOps company, calling its growth "compelling."

Analyst Gray Powell, who also put a $56 price target on GitLab ( GTLB ) shares, said he believes the company is "well positioned" to gain market share in the roughly $40B DevSecOps market, which is growing at roughly 10% or more per year.

"The company’s product capabilities received high marks across multiple categories in our independent fieldwork," Powell wrote in an investor note. He also added that he is "encouraged" by the company's price increase in April, which is likely to drive revenue higher over the next two years.

In addition, Powell said partnerships with Google ( GOOG ) ( GOOGL ) Cloud, Amazon ( AMZN ) Web Services and Oracle ( ORCL ) "demonstrate the strategic value of [Gitlab's] product."

He added that competition from Microsoft's ( MSFT ) GitHub is a "big overhang," but he still believes the company can grow revenue at 30% or more over the next 18 months.

For fiscal 2025, Powell said Gitlab ( GTLB ) could generate 32% growth in revenue to $765M, well above the Wall Street forecast of 28% growth to come in at $714M.

"With the stock trading at just over 6.5x CY25E EV/sales [versus] the typical [30% or more grower] security and infrastructure software grower at closer to 8.5x, we like the risk reward," Powell explained.

For further details see: