DA Davidson Revises GitLab Neutral Rating to $50 PT.

DA Davidson Revises GitLab Neutral Rating to $50 PT.

July 02, 2025 - DA Davidson & Co. has revised its neutral rating for GitLab Inc. (NASDAQ: GTLB) to $50 per share, up from a previous rating of $40. This move comes amidst a series of positive developments for the software development tools maker.

The revision is likely influenced by recent legal and market developments. A U.S. District Court judge dismissed a class action lawsuit alleging that GitLab had overhyped its AI capabilities and customer demand [1]. This legal uncertainty has been removed, boosting investor confidence. Additionally, the company's shares have been trading up by 8.13% amid positive sentiment around software development innovations [2].

GitLab's stock has been volatile, with 32 moves greater than 5% over the last year. However, the recent 5.6% jump indicates that the market considers the legal dismissal meaningful but not a fundamental change in its perception of the business [1]. The company's strong gross margin of 88.6% and no debt position indicate robust operational efficiency and financial strength [2].

Despite the positive sentiment, GitLab faces profitability challenges. The company's negative EBIT margin of -9.6% and pretax profit margin of -32.8% suggest that it needs to enhance its asset utilization and profitability to justify its premium valuation [2]. However, recent strategic initiatives, such as the introduction of the GitLab Duo Agent Platform and a partnership with AWS, are expected to amplify its market penetration and growth narrative.

DA Davidson's revised rating reflects the company's potential for growth and the market's positive sentiment. However, investors should closely monitor GitLab's profitability and cost management challenges to determine its long-term trajectory.

References:
[1] https://finance.yahoo.com/news/why-gitlab-gtlb-stock-trading-175550955.html
[2] https://www.timothysykes.com/news/gitlabinc-gtlb-news-2025_08_16/