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On Monday, Citi analyst Tyler Radke increased the price target for Confluent Inc (NASDAQ:CFLT) shares to $37, up from the previous $33, while keeping a Neutral rating on the company’s stock. According to InvestingPro data, the stock currently trades at $31.01, with analyst targets ranging from $30 to $42, suggesting potential upside. The stock has seen a significant 45% gain over the past six months, despite a recent 11% pullback last week. Radke’s decision comes after evaluating Confluent’s fourth-quarter results for the fiscal year 2024, which demonstrated a solid performance in cloud revenue that exceeded expectations, although subscription growth was the lowest seen from consumption stabilization.
Confluent’s top-line outperformance has translated into improved profitability, with operating margins and earnings per share surpassing the consensus. While currently not profitable, with a -$1.07 EPS over the last twelve months, analysts tracked by InvestingPro expect the company to turn profitable in 2025. The firm’s fiscal year 2025 guidance, which was more optimistic than anticipated, reflects a continued stabilization in its cloud business and possible additional positive effects from the adoption of Data Streaming Platform (DSP) solutions and new product cycles.
The recent partnership with Databricks was highlighted as an incremental positive by Radke, strengthening Confluent’s strategic position in the streaming market. The analyst anticipates that the forthcoming Investor Day will shed more light on the company’s progress in AI within its DSP offerings and provide updates on the latest go-to-market strategies and long-term framework.
Despite the positive aspects, Citi maintains a cautious stance due to potential risks associated with execution disruption following recent changes in Confluent’s executive team. The updated estimates, reflecting these considerations, have led to the new price target of $37, marking an increase from the previous target of $33. InvestingPro analysis reveals the company maintains strong financial health with a current ratio of 3.99 and more cash than debt on its balance sheet. For deeper insights into Confluent’s valuation and growth prospects, including exclusive ProTips and comprehensive financial analysis, check out the full Pro Research Report.
In other recent news, Confluent Inc has been the subject of several analyst updates following its strong fourth-quarter performance. DA Davidson raised their price target to $42, maintaining a Buy rating, citing robust Cloud Revenue growth which reached $137.9 million, a 38% increase year-over-year. TD Cowen also increased their price target to $41, highlighting Confluent’s subscription revenue growth of 24% and the company’s strategic partnerships, such as with Databricks, which are expected to enhance its market positioning. RBC Capital Markets matched this sentiment by raising their target to $41, noting the company’s success in expanding its customer base and strategic shift towards high-growth areas like Cloud and Data Stream Processing.
Bernstein adjusted their target to $35, maintaining an Outperform rating, while acknowledging Confluent’s strong Q4 results and cloud revenue exceeding consensus by 5.2%. Stifel increased their target to $40, retaining a Buy rating, and pointed out that Confluent’s revenue guidance for 2025 slightly exceeds market expectations. Analysts across the board have shown confidence in Confluent’s growth trajectory, with several firms noting the potential for continued revenue growth and profitability improvements. These developments underscore the positive outlook for Confluent as it continues to expand its strategic initiatives and partnerships.
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