© Reuters. Barclays waits for better entry point on GitLab Inc (GTLB)
Barclays downgraded shares of GitLab Inc (GTLB) to Equal-Weight from Overweight, lowering the price target to $50 from $65 per share in a note Friday.
Analysts said that while the firm believes in GTLB’s DevSecOps opportunity and long-term benefits from generative artificial intelligence, the risk/reward is less attractive in the near term as enterprises evaluate AI DevOps purchasing decisions.
“We are cautious NT given a tougher setup at a premium valuation, and another step down in billings growth could drive more questions around 4Q renewals/competition (and before price increase benefits fully hit revs.). Bookings could face timing headwinds as new AI coding tools are evaluated,” the analysts explained.
However, while the firm is “waiting for a better entry point,” they noted that better SaaS growth from the company would change the investment bank’s minds.
“GTLB winning outside of self-managed for enterprise use cases would help address investor competition concerns,” wrote the analysts. “We expected better SaaS rev. adds this year off a smaller base, but 1H23 adds were weaker than last year….
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