On Friday, Bernstein, a division of SocGen Group, raised its stock price target for GitLab Inc (NASDAQ: GTLB) to $78.00, up from the previous target of $70.00, while maintaining an Outperform rating on the stock.
The revision follows GitLab's fiscal third quarter 2025 results, which exceeded expectations by 4.6%, surpassing guidance by $8.5 million. This performance also led to an increase in the full-year guidance by $10.5 million and an implied fourth-quarter guidance boost of $2 million.
Bernstein highlighted GitLab's significant top-line beat, which contributed to a more substantial than expected improvement in Non-GAAP operating margins (OpM) of over 250 basis points. This indicates GitLab's trajectory and commitment to margin expansion.
Moreover, the firm noted the appointment of a new CEO, Bill Staples, who succeeds co-founder and former CEO Sid Sijbrandij. Sijbrandij, who has been dealing with health issues, has transitioned to the role of Executive Chair of the board.
Staples, who recently served as CEO of New Relic (NYSE:NEWR) before its acquisition by a private equity fund, steps in at a time when GitLab has shown robust financial performance. Bernstein acknowledged that questions have arisen regarding whether the leadership change might suggest GitLab is positioning itself for a sale, a possibility they intend to monitor.
In response to the latest earnings report and guidance, Bernstein has adjusted its revenue and margins forecasts. The firm's revised price target is based on a 50/50 blend of a multiples regression, which now assumes a ~14x Price to Next (LON:NXT) Twelve Months (NTM) revenue, up from ~13x, and a discounted cash flow (DCF) analysis with a 13% Weighted Average Cost of Capital (WACC) and a 3% growth rate.
The combined methodologies underpin Bernstein's decision to raise the price target and reiterate an Outperform rating for GitLab.
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