- KeyBanc analyst Michael Turits had an Overweight rating on GitLab Inc GTLB with a price target of $39.
- The re-rating reflects the analyst's view of GTLB as the dominant independent DevSecOps platform, a beneficiary of vendor consolidation and public cloud adoption, and a path to reaccelerating revenue in FY25.
- The analyst highlighted several key points regarding Gitlab and the DevOps competitive landscape following Amazon.Com Inc AMZN making generally available its AI-based programming tool, Amazon CodeWhisperer.
- GitLab released its own AI programming tool, Code Suggestions, in private beta this February and released ML-based Suggested Reviewers last September.
- GitLab has outlined an AI strategy on its website, and management discussed on its 4Q earnings call its vision to incorporate AI throughout its DevSecOps platform, including Intelligent Code Security and Workflow Automation.
- While AI programming capabilities from Amazon and GitHub present the risk of an uptick in competition, especially from a messaging/mind share and a bundling perspective, the analyst believes GitLab's core business is not code generation but code repository, pipelining, and CI differentiated by the breadth of its offering and enterprise-level capabilities for code review, governance, and compliance.
- Overall, to the extent developer productivity gains from AI tools increase the velocity of code generation and the volume of potentially lower-quality code, the analyst sees this as a potential for increased demand for Gitlab's repository/ pipelining/security/governance capabilities.
- While the analyst retains some caution around strengthening AI capabilities from hyperscale competitors; the impact of headcount reductions across customers on GitLab's seat-based model; and increased macro headwinds cited on its 4Q earnings, he continues to view GTLB as firmly positioned as the #1 DevOps consolidator outside of Microsoft Corp MSFT GitHub.
- Price Action: GTLB shares traded lower by 3.23% at $32.06 on the last check Friday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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