Gitlab Inc GTLB “screens very well” in the four Ms for software investing: market, competitive moat, margin potential and management strength, according to BofA Securities.
The Gitlab Analyst: Koji Ikeda initiated coverage of Gitlab with a Buy rating and a price target of $140.
The Gitlab Thesis: The market being addressed by the company is expected to reach $52 billion by 2025, Ikeda said in the initiation note.
The market is also underpenetrated, which creates “a long-tail growth opportunity for the business,” he added.
Gitlab has a solid competitive moat, given its strong positioning in source code management, an end-to-end DevOps platform, more than 150% net revenue retention, its strategic partner channel, and DevOps becoming “an attractive category,” the analyst mentioned.
“Longer-term, management sees the business driving 20%+ operating margins and 25%+ free cash flow margins,” Ikeda said. “We believe management is viewed as visionary by the end-market, and has the potential to build a reputation as solid operators as a public company,” he added.
GTLB Price Action: Shares of Gitlab rose by 5.10% to $129.84 Monday morning at publication.
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