Patience required for GitLab, Confluent best-in-class, claims Mizuho

By Sam Boughedda

Mizuho initiated coverage of Gitlab Inc (NASDAQ:) with a Neutral rating and a $38 price target and Confluent Inc (NASDAQ:) with a Buy rating and $28 per share price target on Wednesday.

In a note on GitLab, the investment bank stated the company is a strong DevOps player. However, analysts believe patience is likely required.

“GTLB’s robust single codebase architecture is very well suited to help businesses address critical DevSecOps needs, and we believe the co. can meaningfully benefit from vendor consolidation over time,” the analysts wrote. “Despite our enthusiasm for its platform, the tougher macro conditions now appear to be having an outsize effect on GTLB.”

While they think the FY24 numbers “look de-risked,” they stated that execution is likely to be choppy over the near term and is “concerned that the upside drivers will be limited.”

Meanwhile, the analysts said the firm expects data streaming adoption to “go much higher” over the medium term and beyond and “view CFLT’s platform as best-in-class.”

“We also see CFLT as a key beneficiary of a trend towards managed data streaming solution,” the analysts wrote.