This Agentic AI Leader Is New on My Radar — And Wall Street Likes What It Sees
As tech suffers and small-caps gain in rotational action, I'm eyeing this name's interesting chart pattern with earnings on the horizon.
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There is choppy action on Monday morning as money moves out of some of the extended technical names such as Meta Platforms META and Applovin APP and into the Russell 2000 IWM and sectors like biotechnology XBI and financials XLF. Breadth is running positive, and there are over 550 new 12-month highs.
The rotational action illustrates how there is still an appetite for stocks, although concerns are increasing about valuation levels of the best-performing names. There have been some very big post-earnings moves in technology growth stocks, and they need the rest. However, there are still many secondary stocks that are not expensive or technically extended.
One example of something that looks good both technically and fundamentally is Xeris BioPharma. XERS, which is on the verge of breaking out on Tuesday morning. Another stock that is gaining strong momentum is data center play Nebius Group (NBIS). A week ago, I discussed Atour Lifestyle Holdings ATAT as a potential breakout play, and it is moving nicely now.
A new name on my radar today is GitLab GTLB, a comprehensive platform designed for software development and collaboration. It uses DevSecOps, a software engineering methodology that speeds up the development process. GitLab provides a wide range of tools that facilitate the entire software development lifecycle, from planning and coding to testing, deployment, and monitoring.
GitLab is a leader in agentic AI, which is an advanced form of artificial intelligence that can autonomously make decisions, take actions, and continuously learn from interactions without constant human oversight. It is a significant leap forward in AI technology, combining multiple AI capabilities to solve complex, multi-step problems through reasoning and iterative planning.
GitLab is expected to earn $0.79 per share in the fiscal year ending January 2025. In the January 2024 quarter, revenue growth was 31%, and EPS growth was 155%. The stock has 20 buy ratings and three hold ratings. The average price target is $80.43.
On December 12, Macquarie initiated coverage of GitLab with an Outperform rating and a $90 price target. It is the top pick for the analyst as the company has emerged as a key vendor in the rapidly evolving developer security operations toolchain, with an AI-powered platform that is useful to managers, developers, testers, IT operations, security teams, analysts, solution architects, and other personnel across the software development lifecycle.
Macquarie is bullish on GitLab's investment opportunity and views the company as a valuable strategic and financial asset, adding that consensus revenue expectations through fiscal 2027 look beatable, even with revenue decelerating modestly to +22% year over year in this medium-term horizon.
Technically, the stock has a complex cup-with-handle pattern with overhead resistance of about $74. Earnings are due March 3.
At the time of publication, Rev Shark was long XERS, NBIS, GTLB and ATAT.
