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On Friday, Cloudflare Inc . (NYSE: NYSE:NET) maintained its Neutral rating according to BTIG, following the company’s release of its fourth-quarter financial results for the year 2024 and the initial outlook for 2025. Cloudflare reported a revenue of $459.9 million, a 26.9% year-over-year increase, surpassing both BTIG’s and the Street’s estimates of $452.0 million and a 24.7% year-over-year increase, respectively. The company maintains impressive gross profit margins of 77.5%, according to InvestingPro data. The operating income for the quarter stood at $67.2 million, boasting a 14.6% margin, which was significantly higher than BTIG’s projection of $57.8 million and the Street’s $57.3 million.
Looking ahead, Cloudflare’s midpoint guidance for 2025 anticipates revenues of $2.092 billion, marking a 25.3% year-over-year growth, which aligns with BTIG’s forecast of $2.078 billion and the Street’s projection of $2.093 billion, both expecting a similar 25.3% year-over-year increase. With an overall Financial Health score rated as "GOOD" by InvestingPro, which analyzes over 30 financial metrics, the company appears well-positioned to execute its growth plans. The company highlighted its progress in go-to-market (GTM) strategy changes initiated a year prior and expects to see a meaningful acceleration in capacity and ramped representatives in the second half of 2025.
Cloudflare has also been successful in securing larger deals, including signing its largest-ever new customer during the quarter. The company’s strong execution is reflected in its robust current ratio of 3.37, indicating solid liquidity to support growth initiatives. Furthermore, the company noted that pool of funds deals, which accounted for 9% of annual contract value (ACV), are gaining popularity among customers and are projected to drive revenue growth throughout the year. The company anticipates a higher percentage of revenue in the second half of 2025 compared to the same period in 2024, estimating an increase of about 40-50 basis points.
The company’s performance was bolstered by strong activity in large deals, with over half of the 55 customers in the $1 million-plus cohort being added in the last quarter of 2024. The stock has shown remarkable momentum, with an 85.3% price return over the past six months. Despite the positive results and outlook, BTIG maintains a Neutral rating on Cloudflare stock, citing the stock’s post-market close trading valuation at 21.0 times 2026 estimated enterprise value to sales, which is higher than any other company in BTIG’s coverage. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with comprehensive valuation insights available in the Pro Research Report.
In other recent news, Cloudflare Inc. has been the subject of various analyst evaluations and internal changes. JMP Securities increased the price target for Cloudflare to $180, citing the company’s unique position in the cybersecurity sector and recent advancements in artificial intelligence. Meanwhile, Needham raised its price target to $160 due to the company’s improved sales productivity and strategic focus on enterprise sales.
However, Baird adjusted their rating from Outperform to Neutral for Cloudflare, despite raising their price target to $140, citing a balanced risk-reward scenario. Truist Securities also increased their price target for Cloudflare to $140, forecasting a 25.6% year-over-year revenue increase and an operating margin of 13.4% for the full fiscal year 2025.
In terms of internal developments, Cloudflare announced the appointment of Michelle Zatlyn as Co-Chair of the Board. Zatlyn, who will maintain her operational responsibilities, has been recognized for her significant contributions to the company’s growth. These recent developments reflect the company’s strategic positioning and innovative approach to product development.
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