UBS maintains Neutral on GitLab stock citing demand stability

UBS has kept its Neutral rating on GitLab Inc (NASDAQ:GTLB) with a $40.00 price target. The company's stock is currently trading at $42.08, which is slightly lower than UBS’s Fair Value estimate of $42.77. Partner assessments suggest stable demand, with both partners achieving or surpassing their second-quarter growth targets, unlike in the previous quarter when two out of four fell short.

Seat growth remained steady, and the recent layoffs did not cause significant disruption. The adoption of the Duo AI Product is limited, with just 15-25% of GitLab’s user base utilizing it, primarily in pilot or testing stages. UBS anticipates a similar quarter-over-quarter growth of 3.6%, resulting in roughly 20% revenue growth for the second quarter.

Over the past year, GitLab has posted 25% revenue growth, maintaining an impressive gross profit margin of 87%. UBS cautions that market expectations may be overly optimistic at 21-22% revenue growth, translating to $21-24 million in sequential revenue gains. The firm prefers to wait for the earnings report, noting GitLab’s stock has more than doubled from its April lows.

Shares have surged 59% over the past six months, rising from a 52-week low of $18.73. Earnings are due in 11 days. GitLab is set to report its quarterly earnings, with Guggenheim maintaining a Neutral rating and expecting 19% revenue growth for the second quarter of fiscal 2027, down from last year’s 29% growth. The company has appointed Thomas Lloyd as Chief Business and Legal Officer, responsible for overseeing business and legal operations.

GitLab also released GitLab 19.2, featuring AI-powered automation for software development and security workflows. Cantor Fitzgerald maintained a Neutral rating, revised the first-quarter fiscal 2027 paid Consumption Run Rate to about $15 million. These updates highlight GitLab’s strategic and operational shifts. This report is AI-generated and reviewed by an editor.