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On Thursday, Canaccord Genuity adjusted its price target for Confluent Inc (NASDAQ:CFLT), reducing it to $32.00 from the previous $38.00, yet reaffirmed a Buy rating on the stock. Currently trading at $23.81, the stock has broader analyst targets ranging from $22 to $42, with a consensus recommendation leaning toward Buy. Kingsley Crane, an analyst at Canaccord, expressed continued confidence in Confluent’s prospects, emphasizing the company’s strong position in the burgeoning data streaming technology sector and the strategic benefits of its cloud platform.
Crane highlighted Confluent’s leading role in the data-in-motion market and noted the company’s potential for high growth rates. According to InvestingPro data, the company has demonstrated solid revenue growth of 24% in the last twelve months, with a robust gross profit margin of 73%. Despite the lowered price target, the analyst’s outlook for Confluent remains optimistic, citing a favorable risk/reward balance as the company emerges from a go-to-market transition that has reportedly exceeded expectations.
The new price target of $32 is based on an approximate 8 times multiple of Confluent’s projected sales for the calendar year 2026. While the company currently trades at high revenue multiples, InvestingPro analysis shows analysts expect profitability this year, with an EPS forecast of $0.39 for FY2025. Canaccord’s analysis suggests that this valuation is justified for a company that is defining its category and has the potential to resume growth rates in the high 20 percent range or more after completing its consumption transition.
Confluent, which specializes in real-time data streaming services, is recognized for its ability to help businesses leverage the power of data in motion. The company’s cloud platform has been designed to overcome the challenges faced by many organizations that have previously struggled to scale with open-source solutions. InvestingPro analysis reveals the company maintains strong financial health with a current ratio of 3.99 and holds more cash than debt on its balance sheet, providing stability for future growth.
The Canaccord analyst’s statement underscores the belief that Confluent’s valuation is reasonable for a company that is not only dominant in its field but also has significant growth prospects. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. The Buy rating suggests that Canaccord Genuity sees Confluent as an attractive investment despite the recent adjustment in the price target. Discover more insights about CFLT and access 6 additional ProTips with a subscription to InvestingPro, including detailed analysis in the comprehensive Pro Research Report.
In other recent news, Confluent Inc. reported its first-quarter 2025 earnings, surpassing analyst expectations with earnings per share (EPS) of $0.08 and revenue of $271.1 million, above the anticipated $264.46 million. Despite this, the company’s stock experienced a decline in aftermarket trading. Confluent’s subscription revenue increased by 26% year-over-year, with the Confluent Cloud segment showing a 34% rise, aligning with expectations. The company added 340 new customers, the highest in three years, and gained 16 new customers with annual recurring revenues exceeding $1 million.
Confluent has provided a conservative revenue outlook for fiscal year 2025, projecting subscription revenue between $1.100 billion and $1.110 billion, reflecting 19-20% growth. Needham analysts adjusted Confluent’s price target to $26, maintaining a Buy rating, while Bernstein and Evercore ISI also lowered their targets to $32 and $28, respectively, both keeping an Outperform rating. Goldman Sachs revised its target to $24, maintaining a Neutral rating. These adjustments reflect mixed results and a cautious outlook amid broader economic uncertainties, yet analysts remain optimistic about Confluent’s long-term prospects.
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