- Needham analyst Mike Cikos initiated coverage on GitLab Inc GTLB with a Buy rating with a price target of $70 (21% upside).
- GitLab delivers a single application to drive cross-function collaboration and improve customer efficiencies for Application Development processes, Cikos noted.
- He believes GitLab is increasingly becoming the center of gravity for organizations' software innovation, where GitLab's DevOps Platform benefits from its dual-flywheel development strategy.
- Notably, the company's more than $40 billion TAM is predominantly Greenfield and competes against DIY tools.
- Its nearest competitor Microsoft Inc's MSFT GitHub, is present in less than 20% of deals where GitLab competes, and GitLab's win rates are consistent irrespective of GitHub's presence.
- He views rapid innovation and the frictionless go-to-market as two pillars that can sustain GitLab's growth in an underpenetrated market.
- He believes the market's adoption of a Platform, GitLab's maturing platform, and the growing shift toward DevSecOps where Security is embedded in DevOps all feature prominently in supporting the uptake of GitLab's Ultimate Tier.
- He also sees the potential for GitLab to create value by creating new tiers/packages, potentially increasing platform monetization over time.
- Price Action: GTLB shares traded higher by 3.02% at $57.70 on the last check Thursday.
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