Cloudflare stock target cut to $148 by RBC, keeps outperform

On Thursday, RBC Capital Markets adjusted its outlook on Cloudflare Inc . (NYSE:NET), reducing the price target to $148 from the previous $170, while continuing to endorse the stock with an Outperform rating. The revision follows an in-depth review of the company’s prospects and strategy during Cloudflare’s investor day. The stock has experienced significant volatility recently, declining 8.87% in the past week, though maintaining an impressive 51.93% gain over the last six months.InvestingPro analysis reveals that Cloudflare currently trades above its Fair Value, with 14 additional exclusive insights available to subscribers.

Matt Hedberg of RBC Capital highlighted the positive impressions from the event, noting Cloudflare’s clear company vision and the strength of its management team. According to Hedberg, Cloudflare stands out as a top long-term growth selection, with the investor day emphasizing a ramp-up in product innovation, an evolving market approach, robust financial standing, and an ambitious AI strategy. The company’s strong financial position is reflected in its healthy current ratio of 2.86 and impressive gross profit margin of 77.32%.

Cloudflare’s management has set an ambitious goal for the company to scale its business to surpass $5 billion in revenue by 2028. This target underscores the company’s confidence in its growth trajectory and strategic initiatives.

Despite the optimistic view on Cloudflare’s future, the price target adjustment to $148 was attributed to a broader compression of peer multiples, which influence valuation benchmarks across the sector.

RBC Capital’s maintained Outperform rating indicates their belief that Cloudflare’s shares will outperform the average total return of the stocks covered by the analysts at the firm over the next 12 to 18 months. The revised price target suggests that RBC Capital sees potential for the stock to rise from its current level, albeit at a more conservative valuation than previously estimated.

In other recent news, Cloudflare Inc. has been the subject of several analyst reports following its recent Investor Day. The company has adjusted its revenue target, now aiming to reach $5 billion by 2028, a year later than initially planned. This revision reflects changes in the macroeconomic environment and Cloudflare’s go-to-market strategy. Despite this delay, analysts from Truist Securities and Stifel maintain a Buy rating with a $175 price target, highlighting Cloudflare’s growth potential and strategic initiatives.

Needham also maintains a Buy rating but has reduced its price target to $145, acknowledging the broader economic context affecting the company’s timeline. Piper Sandler, on the other hand, has lowered its price target to $131 while maintaining a Neutral rating, citing alignment of current expectations with valuation. Cantor Fitzgerald also maintains a Neutral rating with a $149 target, noting the company’s strategic positioning in AI and edge computing.

Cloudflare’s recent presentations emphasized its AI capabilities and unique technology infrastructure, which analysts see as a competitive advantage. The company’s focus on securing larger deals and enhancing sales productivity is expected to drive future growth. These developments underscore the varied analyst perspectives on Cloudflare’s long-term market position and growth trajectory.

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