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GitLab and Baidu have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – October 25, 2024 – Zacks Equity Research shares GitLab (GTLB - Free Report) as the Bull of the Day and Baidu (BIDU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amicus Therapeutics, Inc. (FOLD - Free Report) , Clipper Realty Inc. (CLPR - Free Report) and Harrow, Inc. (HROW - Free Report) .
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.
Morgan Stanley: GTLB Is "Next Enterprise Platform Story"
On October 9, MS analyst Sanjit Singh initiated coverage of GTLB with an Overweight rating and $70 price target, describing the company as poised to become the next "enterprise platform story in software" as a "key consolidator" in the fragmented and fast-growing software delivery market.
Customers are expected to take the platform approach to software development amid "tougher IT budgets, growing integration cost and lost productivity from switching between multiple apps," the Morgan Stanley analyst wrote.
"With a platform that addresses all workflows involved in releasing and securing software and having already secured market-leading positions" in source code management and continuous integration and delivery, GitLab is poised to emerge as a 'strategic platform' in the market for software development and IT operations."
Singh concluded that GitLab's core business may generate a compound annual growth rate of 17% over the next four years to as much as $24 billion in 2027.
Needham: Ultimate for Enterprise Offers Richer Growth
Needham analyst Mike Cikos put out a note this week upgrading the stock from Hold to Buy with a $70 PT. He focused on GitLab's expanded enterprise product offerings, with the Ultimate level gaining traction due to innovations like Duo Pro Enterprise and Dedicated. Despite his late entry to the bull camp, Cikos offered a diversity of interesting data points to understand the company and the business.
Cikos highlighted recent data from GitLab that shows seven out of the company’s top 10 deals in the second quarter of fiscal 2025 were for Ultimate, and 65% of new dollars from $100,000-plus customers came from this tier. Innovations like Dedicated and Duo Pro, exclusive to Ultimate, further enhance its appeal.
Cikos also gave a good frame of reference for GitLab's opportunity in the face of big competition from Microsoft’s GitHub. He thinks that GitLab’s focus on security and compliance gives it an edge as a neutral vendor not competing with clients in any respect.
Cikos expects increased adoption of Ultimate compared to their Premium service, driven by stronger Enterprise sales and GitLab’s compliance and security features, which are crucial for large organizations. This will expand margins.
And as another bright horizon, the analyst anticipates that GitLab will continue growing its public sector presence, aided by its recent product launches and federal security certifications.
Bottom line: GTLB looks like a good enterprise software play here as it climbs out of a 7 month base.
Baidu is the premier AI technology company in China and its shares recently benefited from the late September PBOC stimulus program.
BIDU shares vaulted 35% from $86 to $116 in just eight trading days.
But just as quickly, the excitement has faded and the stock is back below $90, much to the surprise of uber China bulls.
My colleague Andrew Rocco has written extensively about the exploits of one such enthusiast, namely celebrity hedge fund manager David Tepper who helms the Appaloosa Fund.
What stands out is that Andrew was anticipating the extreme value in China tech shares even before the PBOC booster action.
So why is Baidu in the cellar of the Zacks Rank?
Revenue estimates for Baidu continue to drift in the zero to 5% range.
But it's the downward pressure on EPS projections that make for the #5 Rank.
In the past month, the consensus for this year has slipped a trifle from $11.33 to $11.17. But 2025 estimates have dropped 5% from $12.28 to $11.68.
Not a dramatic slide, but given the top line "flat line" it's concerning for growth investors looking at a foreign economy that is even having trouble boosting their own equities.
Bottom line: I've always been a fan of Baidu for their AI innovation and central position in the AI economy. I hope some day soon that their government gets out of the way and lets foreign investors (us) participate in their upside.
Additional content:
Best Momentum Stocks to Buy for Today
Here are three stocks with buy rank and strong momentum characteristics for investors to consider today:
Amicus Therapeutics, Inc.: This biotechnology company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 10% over the last 60 days.
Amicus Therapeutics' shares gained 10.2% over the last three months compared with the S&P 500’s advance of 6.8%. The company possesses a Momentum Score of A.
Clipper Realty Inc.: This real estate company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 43.6% over the last 60 days.
Clipper Realty's shares gained 68.2% over the last three months compared with the S&P 500’s advance of 6.7%. The company possesses a Momentum Score of B.
Harrow, Inc.: This eyecare pharmaceutical company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 164.3% over the last 60 days.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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GitLab and Baidu have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 25, 2024 – Zacks Equity Research shares GitLab (GTLB - Free Report) as the Bull of the Day and Baidu (BIDU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amicus Therapeutics, Inc. (FOLD - Free Report) , Clipper Realty Inc. (CLPR - Free Report) and Harrow, Inc. (HROW - Free Report) .
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.
Morgan Stanley: GTLB Is "Next Enterprise Platform Story"
On October 9, MS analyst Sanjit Singh initiated coverage of GTLB with an Overweight rating and $70 price target, describing the company as poised to become the next "enterprise platform story in software" as a "key consolidator" in the fragmented and fast-growing software delivery market.
Customers are expected to take the platform approach to software development amid "tougher IT budgets, growing integration cost and lost productivity from switching between multiple apps," the Morgan Stanley analyst wrote.
"With a platform that addresses all workflows involved in releasing and securing software and having already secured market-leading positions" in source code management and continuous integration and delivery, GitLab is poised to emerge as a 'strategic platform' in the market for software development and IT operations."
Singh concluded that GitLab's core business may generate a compound annual growth rate of 17% over the next four years to as much as $24 billion in 2027.
Needham: Ultimate for Enterprise Offers Richer Growth
Needham analyst Mike Cikos put out a note this week upgrading the stock from Hold to Buy with a $70 PT. He focused on GitLab's expanded enterprise product offerings, with the Ultimate level gaining traction due to innovations like Duo Pro Enterprise and Dedicated. Despite his late entry to the bull camp, Cikos offered a diversity of interesting data points to understand the company and the business.
Cikos highlighted recent data from GitLab that shows seven out of the company’s top 10 deals in the second quarter of fiscal 2025 were for Ultimate, and 65% of new dollars from $100,000-plus customers came from this tier. Innovations like Dedicated and Duo Pro, exclusive to Ultimate, further enhance its appeal.
Cikos also gave a good frame of reference for GitLab's opportunity in the face of big competition from Microsoft’s GitHub. He thinks that GitLab’s focus on security and compliance gives it an edge as a neutral vendor not competing with clients in any respect.
Cikos expects increased adoption of Ultimate compared to their Premium service, driven by stronger Enterprise sales and GitLab’s compliance and security features, which are crucial for large organizations. This will expand margins.
And as another bright horizon, the analyst anticipates that GitLab will continue growing its public sector presence, aided by its recent product launches and federal security certifications.
Bottom line: GTLB looks like a good enterprise software play here as it climbs out of a 7 month base.
Bear of the Day:
Baidu is the premier AI technology company in China and its shares recently benefited from the late September PBOC stimulus program.
BIDU shares vaulted 35% from $86 to $116 in just eight trading days.
But just as quickly, the excitement has faded and the stock is back below $90, much to the surprise of uber China bulls.
My colleague Andrew Rocco has written extensively about the exploits of one such enthusiast, namely celebrity hedge fund manager David Tepper who helms the Appaloosa Fund.
You can find some good recent coverage here...
Sep 26: Tepper Crushes China Trade: Here's Why he's Still Bullish
Aug 19: Is it Time to Buy Chinese Stocks?
What stands out is that Andrew was anticipating the extreme value in China tech shares even before the PBOC booster action.
So why is Baidu in the cellar of the Zacks Rank?
Revenue estimates for Baidu continue to drift in the zero to 5% range.
But it's the downward pressure on EPS projections that make for the #5 Rank.
In the past month, the consensus for this year has slipped a trifle from $11.33 to $11.17. But 2025 estimates have dropped 5% from $12.28 to $11.68.
Not a dramatic slide, but given the top line "flat line" it's concerning for growth investors looking at a foreign economy that is even having trouble boosting their own equities.
Bottom line: I've always been a fan of Baidu for their AI innovation and central position in the AI economy. I hope some day soon that their government gets out of the way and lets foreign investors (us) participate in their upside.
Additional content:
Best Momentum Stocks to Buy for Today
Here are three stocks with buy rank and strong momentum characteristics for investors to consider today:
Amicus Therapeutics, Inc.: This biotechnology company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 10% over the last 60 days.
Amicus Therapeutics, Inc. price-consensus-chart | Amicus Therapeutics, Inc. Quote
Amicus Therapeutics' shares gained 10.2% over the last three months compared with the S&P 500’s advance of 6.8%. The company possesses a Momentum Score of A.
Amicus Therapeutics, Inc. price | Amicus Therapeutics, Inc. Quote
Clipper Realty Inc.: This real estate company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 43.6% over the last 60 days.
Clipper Realty Inc. price-consensus-chart | Clipper Realty Inc. Quote
Clipper Realty's shares gained 68.2% over the last three months compared with the S&P 500’s advance of 6.7%. The company possesses a Momentum Score of B.
Clipper Realty Inc. price | Clipper Realty Inc. Quote
Harrow, Inc.: This eyecare pharmaceutical company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 164.3% over the last 60 days.
Harrow, Inc. price-consensus-chart | Harrow, Inc. Quote
Harrow's shares gained 127.2% over the last three months compared with the S&P 500’s advance of 6.7%. The company possesses a Momentum Score of A.
Harrow, Inc. price | Harrow, Inc. Quote
See the full list of top ranked stocks here
Learn more about the Momentum score and how it is calculated here.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.