Gitlab is the IBD Stock Of The Day as the company emerges as a strong player in a fast-growing software market and GTLB stock inflects to consistent quarterly profits.
Founded in 2014, GitLab helps customers develop software and deploy new applications in a secure process.
GitLab launched its initial public offering in October 2021. Shares swooned for 18 months before GitLab stock began rebounding in June.
In fiscal 2025, which starts with the April quarter, Gitlab adjusted profit is expected to jump to 36 cents per share from 13 cents in the current fiscal year.
Also, revenue growth is solid amid recent price hikes and upgrades to artificial intelligence tools.
"We believe the business is setup to deliver 25%-plus year-over-year revenue growth with expanding operating margins and free cash flow margins over the medium term," said Bank of America analyst Alkesh Shah in a recent report.
GTLB Stock Finds Support
On Tuesday, Gitlab shares rose 1.9% to close at 62.73.
With recent gains, GTLB stock cleared its 21-day line and broke a short downtrend.
IBD research has found that companies that find support at the 21-day exponential moving average tend to outperform. Gitlab stock holds an entry point of 62.98 — last week's high.
Buy points are prices representing key resistance, and once cleared the stock has a tendency to advance.
In addition, Gitlab stock has gained about 39% over the last 52 weeks.
Mizuho Securities analyst Gregg Moskowitz recently upgraded GTLB stock to buy.
"While we have always been enthusiastic about GTLB's platform, prior execution issues triggered by a challenging macro left us uncertain whether the near-to-medium term execution would be smooth," Moskowitz said. "That said, we have become more constructive on GTLB's ability to execute and grow at a high level."
At times, the company has struggled with its go-to-market strategy in the enterprise technology sector. In July, GitLab brought in Chris Weber as chief revenue officer. Weber had been chief business officer at UiPath. Earlier, he worked at Microsoft in enterprise sales.
Crowded Software Market
GitLab operates in a crowded software development market called "DevOps," for developer and operations. Aside from Microsoft, Atlassian and JFrog are formidable rivals. GitLab also competes with privately held Cloudbees.
Alphabet's Google has emerged as a Gitlab cloud computing partner. Google also has invested in Gitlab.
Gitlab's roots go back to 2011 when Ukrainian software engineer Dmytro Zaporozhets created open-source software collaboration tools.
GitLab has built an end-to-end platform. GitLab's tools span across project management, source code management, issue tracking, application security testing, deployment, application monitoring and collaboration. At BofA, Shah views Gitlab as a likely market share gainer.
"We view Gitlab as well positioned to be a share gainer in the $50 billion DevSecOps opportunity," said Shah in a report. "Over the years, GitLab has successfully developed an end-to-end DevSecOps platform that enables developer teams, IT operations teams, and security teams to efficiently manage application development, deployment, while being secure."
San Francisco-based GitLab generates most revenue from subscription-based, software-as-a-service products. Free open-source software is still available to programmers.
GitLab has roughly 30 million estimated registered users and more than 1 million active license users.
GTLB Stock: Technical Ratings
In addition, GTLB stock holds a Relative Strength Rating of 94 out of a best-possible 99.
In addition, GTLB stock holds an IBD Composite Rating of 97, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
Gitlab stock owns an Accumulation/Distribution Rating of B-plus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
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