GitLab stock price target lowered to $50 at Wolfe Research after mixed Q3

Investing.com - GitLab Inc (NASDAQ:GTLB) received a price target reduction from Wolfe Research, which lowered its target to $50.00 from $52.00 while maintaining an Outperform rating following the company’s third-quarter results. According to InvestingPro data, GitLab is currently trading at $36.41, significantly below Wolfe’s target and near its 52-week low of $37.90, suggesting potential upside based on analyst consensus.

GitLab delivered what Wolfe Research characterized as a "mixed" quarter, with revenue of $244 million growing 25% year-over-year and exceeding consensus by 2.1%, a smaller beat than the 4% outperformance in the second quarter. This aligns with GitLab’s impressive 27.35% revenue growth over the last twelve months. Calculated billings of $253 million grew 17% but missed Street expectations by 3.7%, while current remaining performance obligation (cRPO) bookings increased 19% year-over-year to $659 million.

The company’s Ultimate tier continued to show momentum, now representing 54% of annual recurring revenue (ARR) and included in seven of the ten largest deals. Software-as-a-Service offerings grew 36% year-over-year and now account for 31% of revenue, while international execution strengthened. InvestingPro data highlights GitLab’s impressive 88.01% gross profit margin, reflecting the efficiency of its software business model.

These positive factors were offset by ongoing weakness in the small and medium-sized business segment (approximately 8% of ARR) and disruption in the public sector (approximately 12% of ARR) stemming from the government shutdown during GitLab’s heaviest federal quarter. Dollar-based net retention rate declined slightly to 119% from 121% in the second quarter.

GitLab raised its full-year revenue guidance to $946.5 million, representing 25% year-over-year growth and 0.6% above Street estimates, with management noting they maintained consistent methodology incorporating prudence for both SMB weakness and lingering public sector impact as federal agencies work through backlogs. Despite current challenges, InvestingPro Tips indicate that 19 analysts have revised their earnings upwards for the upcoming period and predict the company will be profitable this year, suggesting confidence in GitLab’s financial trajectory.

In other recent news, GitLab Inc reported its fiscal third-quarter 2026 results, showcasing a 2.5% revenue beat driven by subscription and Software-as-a-Service (SaaS) offerings, although license revenue saw a decline. The company achieved a 25% year-over-year revenue growth, surpassing Wall Street’s expectations. Despite these positive results, GitLab’s guidance for the fourth quarter projects revenue growth below 20% year-over-year for the first time since its IPO. This outlook has led Truist Securities to lower its price target for GitLab to $42, maintaining a Hold rating due to growth concerns.

Meanwhile, Piper Sandler has reiterated its Overweight rating with a $70 price target, while Cantor Fitzgerald also maintains an Overweight rating with a $60 price target, citing strong performance in revenue, operating margin, and free cash flow metrics. Mizuho, however, reduced its price target to $47, maintaining a Neutral rating after the mixed earnings report. Despite the varied analyst opinions, GitLab’s performance was bolstered by increased adoption of GitLab Ultimate and ongoing cost efficiency measures. The company also reported record levels of new customer contributions established in the previous quarter.

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