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On Wednesday, BofA Securities updated their analysis of Confluent Inc (NASDAQ:CFLT), a data streaming platform vendor, following the company’s robust fourth-quarter 2024 performance. The firm’s analyst Brad Sills increased the price target to $31 from $26 while maintaining an Underperform rating on the stock. According to InvestingPro data, the stock has shown strong momentum with a 49% gain over the past six months, though current analysis suggests it may be slightly overvalued.
Confluent’s fourth-quarter results surpassed both BofA Securities’ and Wall Street’s expectations in terms of subscription revenue, total revenue, and non-GAAP operating income. This performance was attributed to strong business momentum and disciplined cost management, reflected in the company’s impressive 73% gross margin. Despite initial 2025 subscription revenue guidance being slightly below the Street’s expectations at $1.117-1.121 billion compared to $1.12 billion, the guidance is still considered better than expected and may serve as a catalyst for the company. InvestingPro subscribers can access 8 additional key tips about Confluent’s financial health and growth prospects.
Furthermore, the guidance for first-quarter 2025 subscription revenue stands at $253-254 million, which is higher than the Street’s projection of $252.6 million, marking another positive indicator for Confluent. The analyst noted that Confluent’s execution is showing signs of improvement.
However, the report also pointed out that Confluent’s revenue growth plus operating margin profile for 2025 is not keeping pace with the average of its infrastructure software peers. Confluent is operating under the "Rule-of-26," which is below the "Rule-of-32" that applies to its peers. This discrepancy suggests that there may be constraints on the stock’s potential upside until this gap is narrowed. Despite these concerns, the increased price target reflects a recognition of Confluent’s improved execution.
In other recent news, Confluent Inc has been the focus of several analyst updates. Evercore ISI analyst Chirag Ved raised the price target for Confluent to $40.00, citing the company’s strong performance and initial FY25 guidance surpassing Street expectations. Meanwhile, Goldman Sachs increased its price target to $30.00 following Confluent’s fourth-quarter earnings for fiscal year 2024, which displayed a 23% year-over-year revenue increase. JMP Securities maintained a Market Outperform rating with a $40.00 price target, highlighting Confluent’s leadership in the data streaming platform market and substantial total addressable market.
On the partnership front, Confluent and Databricks announced an expansion of their collaboration, introducing new integrations to enhance real-time data accessibility for AI applications. This move is expected to address common challenges in enterprise IT infrastructure and facilitate the construction of AI applications.
Lastly, TD Cowen analysts raised Confluent’s price target from $31.00 to $37.00 while maintaining a Buy rating. The adjustment comes ahead of Confluent’s fourth-quarter earnings report and reflects optimism for the company’s performance in 2025. These are some of the recent developments revolving around Confluent.
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