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Investing.com - Wells Fargo (NYSE:WFC) raised its price target on Cloudflare Inc . (NYSE:NET) to $225.00 from $200.00 on Monday, while maintaining an Overweight rating on the stock. The new target represents potential upside for the $68.4 billion company, which is trading near its 52-week high of $198.01 and has already delivered an impressive 83% return year-to-date.
The firm expects Cloudflare to report strong second-quarter 2025 results when the company announces earnings on Thursday, July 31. Wells Fargo anticipates a beat-and-raise quarter driven by large deals and increasing demand for DDoS protection services. The company’s robust 76.88% gross margins and 27.79% revenue growth over the last twelve months support this optimistic outlook.
Wells Fargo’s research indicates robust large deal activity for Cloudflare, including 14 seven-figure deals and four deals ranging between $10-15 million. These deals support the firm’s positive outlook on the company’s growth trajectory. InvestingPro analysis reveals 16+ additional insights about Cloudflare’s financial health and growth prospects, available in the comprehensive Pro Research Report.
The analyst believes Cloudflare has one of the most sustainable growth profiles in the software sector, with the potential to maintain high-20s to low-30s percentage revenue growth at scale over the next few years.
Given Cloudflare’s current valuation, Wells Fargo suggests management will need to both beat expectations and raise guidance, noting they cannot simply "beat and blame macro uncertainty for the lack of a raise."
In other recent news, Cloudflare announced the pricing of $1.75 billion in convertible senior notes due 2030, with the transaction expected to close in mid-2025. These notes will mature in 2030 and offer a 45% premium over the company’s previous closing stock price. The proceeds will be used for general corporate purposes, including potential strategic transactions. Meanwhile, TD Cowen raised its price target for Cloudflare to $200 from $150, maintaining a Buy rating, citing strong demand for its platform and positive customer feedback on a recent service outage. JMP Securities also maintained a Market Outperform rating with a price target of $180, despite a previous outage affecting multiple Cloudflare services. The company experienced a 62-minute outage due to a service topology change, which has since been resolved with steps identified to prevent future occurrences. Additionally, Cloudflare plans to use proceeds from the note offering to enter into capped call transactions to offset potential dilution.
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