Analysts Are Updating Their GitLab Inc. (NASDAQ:GTLB) Estimates After Its First-Quarter Results

GitLab Inc. (NASDAQ:GTLB) investors will be delighted, with the company turning in some strong numbers with its latest results. The results overall were pretty good, with revenues of US$87m exceeding expectations and statutory losses coming in at justUS$0.18 per share, some 50% below what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for GitLab

Following the latest results, GitLab's nine analysts are now forecasting revenues of US$402.4m in 2023. This would be a huge 39% improvement in sales compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$1.19. Before this earnings announcement, the analysts had been modelling revenues of US$387.4m and losses of US$1.42 per share in 2023. So it seems there's been a definite increase in optimism about GitLab's future following the latest consensus numbers, with a cut to the loss per share forecasts in particular.

There was no major change to the consensus price target of US$66.67, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic GitLab analyst has a price target of US$95.00 per share, while the most pessimistic values it at US$59.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await GitLab shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that GitLab's revenue growth is expected to slow, with the forecast 55% annualised growth rate until the end of 2023 being well below the historical 70% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% annually. So it's pretty clear that, while GitLab's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for GitLab going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - GitLab has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.