Zacks

GitLab and Baidu have been highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
9 min read

In This Article:

For Immediate Release

Chicago, IL – October 25, 2024 – Zacks Equity Research shares GitLab GTLB as the Bull of the Day and Baidu BIDU as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amicus Therapeutics, Inc. FOLD, Clipper Realty Inc. CLPR and Harrow, Inc. HROW.

Here is a synopsis of all five stocks.

Bull of the Day:

GitLab is the $8.5 billion pioneer of a leading DevOps platform serving the various needs of software developers, operations, and security teams. Their code hosting and collaboration platform services offer continuous integration, source code management, out-of-the-box pipelines, agile development, and value stream management.

The company's focus is to enable faster development and iteration of software, in a more secure manner from the inception of code generation to client deployment.

With all the talk of AI about to replace developers as software writes itself, you wouldn't know it looking at the growth of GitLab. The open core platform is on pace to hit nearly $750 million in sales this fiscal year (ends January), representing 28% growth. Plus, analysts are already projecting a 24% top line advance for next year to eclipse $900 million.

And driving the push to the upper realms of the Zacks Rank, EPS estimates have recently jumped after their Q2 "beat-and-raise" report delivered Sep 3. This year's consensus surged 28% in the past month from $0.36 to $0.46, representing 130% annual growth.

Of course, next year's EPS target got a boost as well with a 20% bump from $0.49 to $0.59.

Part of the generous bump to this year's EPS haul must be attributed to the Q2 beat. GitLab delivered $0.15 vs expectations of $0.10, for a 50% earnings surprise. But it's clear that analysts like the growth outlook with new products and increasing enterprise penetration.

Gitlab posted revenues of $182.58 million for the quarter ended July 2024, surpassing the Zacks Consensus Estimate by 3.42%. This compares to year-ago revenues of $139.58 million. The company has topped consensus revenue estimates four times over the last four quarters.

Analyst Reactions

In addition to raising GitLab's growth estimates for the next several quarters, general optimism about the company's niche is encouraging.

Truist put out a note right after earnings citing "We believe that the company is executing on their opportunity to offer enterprises a platform solution for DevOps, in what has been a highly fragmented market to this point. The company also highlighted promising wins with newer offerings, showcasing their ability to leverage their enterprise foothold into extended sales opportunities."

The Truist team led by Joel Fishbein increased their estimates "on incremental optimism" and reiterate their Buy rating and $80 price target for GTLB shares. I thought their general investment thesis and comments on the duration of GitLab's market opportunity to be especially encouraging as well considering the rapid adoption of AI software development tools...

With global enterprises accelerating their digital transformation efforts and adoption of DevOps practices, we believe that GitLab is in a position to benefit from a long tail of durable growth. We believe that shares are relatively attractive to other names in infrastructure software when considering the longevity of the opportunity ahead of them and the compounding growth in their recurring revenue model.

The Truist view inspired me to see what other analysts were missing. I found a couple playing catch-up.

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