Investment Firm Baird Initiates Coverage on GitLab

On Monday, investment firm Baird began research coverage on GitLab stock (NASDAQ:GTLB) with an Outperform rating and a $59 price target. This decision reflects Baird analysts’ growing confidence in GitLab’s potential for growth and market share acquisition within the DevSecOps sector.

GitLab, referred to as the “AI orchestrator,” develops a platform that integrates artificial intelligence (AI) and advanced security features within a cloud-native architecture. The company is well-positioned to meet the rising demand for secure and efficient software development solutions.

Baird notes that GitLab’s success in securing high-value annual contracts, particularly in its security-focused Ultimate tier, contributes to over 46% of its total Annual Recurring Revenue (ARR).

Moreover, the company’s strategic expansion in AI and security capabilities is anticipated to drive continued market share gains and improvements in operational efficiency and margins. GitLab’s raised guidance for fiscal year 2025 reinforces its trajectory for robust long-term growth, highlighting potential upside.

Founded in 2011, GitLab evolved from an open-source project to a leading platform in the DevSecOps space. Its single-application approach has been transformative, accelerating software delivery while integrating security into the workflow.

Baird analysts expressed, “We initiate coverage on GitLab due to its leadership in DevSecOps, strong AI-driven innovations, and strategic positioning in an expansive Total Addressable Market, addressing the increasing demand for efficient, secure, end-to-end software development solutions.”

Baird’s $59 price target implies an enterprise value-to-sales (EV/Sales) ratio of about 9.8x its estimated revenue for 2025, exceeding the peer group’s average multiple of approximately 8.8x EV/Sales.

Potential risks to this positive outlook include possible AI-driven disruptions, increased competition from larger cloud service providers (CSPs), and concerns regarding vendor lock-in among other factors.