GitLab Eyes Catch-Up Rally; Cognyte Builds Confidence With $40 Million In Contracts

Needham analyst Mike Cikos maintained a Buy rating on GitLab (GTLB) with an $85 price target, anticipating a rebound driven by sustained revenue outperformance and improving margins, while maintaining a Hold rating on Cognyte (CGNT). Cikos projects Cognyte's strong position based on recent large contract wins, supporting its fiscal 2026 revenue guidance, and highlights GitLab's potential for a 'catch-up trade' despite investor concerns regarding long-term growth durability and AI pricing, with both companies expected to report upside in their first-quarter results.

Analysis

Needham analyst Mike Cikos offers a generally constructive outlook as first-quarter earnings reports conclude for GitLab (GTLB) and Cognyte Software (CGNT). For GitLab, Cikos reiterates a Buy rating and an $85 price target, forecasting a share price rebound based on expectations of sustained strong execution, continued revenue outperformance, and improving operating margins. He posits a 'catch-up trade' potential for GTLB, which has lagged peers in the Data Infrastructure sector, despite persistent investor questions around its competitive moat versus GitHub, Premium SKU seat growth, long-term growth durability post-price increase, and the packaging of its Duo Enterprise AI offering. While Cikos defends management's strategy on Ultimate SKU adoption, he acknowledges the ongoing debate regarding AI monetization in the DevSecOps space. His fiscal first-quarter estimates for GitLab are $212.6 million in revenue and 14 cents EPS, slightly trailing consensus forecasts of $213.0 million and 15 cents respectively.
Regarding Cognyte, Cikos maintains a Hold rating. He highlights its strengthened position following significant multi-million dollar contract wins, which underpin its fiscal 2026 revenue guidance of approximately $392 million. Although Cognyte’s revenue visibility from its current Remaining Performance Obligation (cRPO) balance exiting fiscal 2025 is ~86%, down from 89% in fiscal 2025 and 94% in fiscal 2024, over $40 million in recently announced total contract value offers some mitigation. Cikos anticipates Cognyte can "continue to grind higher," citing management's recent strong execution on top-line growth, gross margin expansion, and operating expenditure discipline. His fiscal first-quarter estimates for Cognyte are $94.2 million in revenue and $0.02 adjusted EPS, marginally above consensus estimates of $94 million and $0.01. Cikos expects both companies to report upside to their respective Q1 figures, potentially catalyzing positive share price movements from their current levels of $49.56 for GTLB (up 1.62% at publication) and $11.28 for CGNT (up 0.53% at publication).

Key Decisions for Investors

• Investors evaluating GitLab (GTLB) should consider the analyst's $85 price target, which suggests substantial upside from its current $49.56 price, and scrutinize upcoming earnings for evidence of sustained revenue and margin execution, as well as clarity on its AI monetization and competitive positioning.
• For Cognyte (CGNT), the Hold rating warrants a balanced view; investors should weigh its robust contract acquisition and disciplined cost management against the reduced cRPO-based revenue visibility, seeking confirmation that new business can sufficiently support the fiscal 2026 revenue target of ~$392 million.
• Both companies are projected by the analyst to deliver upside in their Q1 results, potentially offering near-term catalysts; however, the differing ratings (Buy for GTLB, Hold for CGNT) suggest varying long-term risk-reward profiles that merit distinct investment considerations.