On Tuesday, TD Cowen maintained its Outperform rating on GitLab Inc (NASDAQ:GTLB) but reduced the stock's price target to $76 from $80.
The adjustment follows GitLab's fourth-quarter earnings report, which showed revenue growth of 33%, surpassing the Street's expectation of 29%. Despite the positive performance, GitLab's shares experienced a downturn in after-hours trading.
The company observed quarter-over-quarter improvements in several key performance indicators, including calculated Recognized Potential Obligations (cRPO) growth, Net Revenue Retention (NRR), and an increase in new customers. Management at GitLab noted signs of improving buying behavior across all customer cohorts.
However, the tempered reaction in share price was attributed to the lower-than-anticipated earnings beat, the absence of an optimistic guidance, and comments suggesting that the provided guidance was less conservative than in the past. This conservative stance on forward-looking statements contributed to the decline in the stock's value after the market closed.
TD Cowen's analyst believes that despite the conservative guidance, GitLab is still likely to achieve growth of over 30% in the coming year. The firm's conviction in the stock's performance is reflected in the continued Outperform rating, even though the price target has been adjusted downward to $76. The new target represents a slight recalibration of expectations in light of the recent earnings report and market response.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.