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Investing.com - DA Davidson lowered its price target on Confluent Inc (NASDAQ:CFLT) to $24.00 from $32.00 on Thursday, while maintaining a Buy rating on the data streaming platform company. According to InvestingPro data, the stock currently trades at $17.91, with analyst targets ranging from $20 to $36, suggesting potential upside despite recent headwinds. The company’s current market capitalization stands at $6.1 billion.
The price target reduction follows Confluent’s second-quarter results, which were slightly ahead of expectations, with the company raising its calendar year 2025 subscription revenue guidance due to strength in its Platform business. InvestingPro data shows the company maintains robust revenue growth of 24.11% and an impressive gross margin of 73.92%, though it remains unprofitable over the last twelve months. For deeper insights into Confluent’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Despite these positive developments, DA Davidson noted that optimizations continued during the quarter, impacting month-over-month Cloud consumption growth, while a major Cloud customer with over $10 million in annual recurring revenue is moving back to the Platform offering.
This customer migration will significantly reduce Confluent’s total annual recurring revenue and impact expected fourth-quarter year-over-year Cloud growth by low single digits, leading the company to lower its Cloud expectations with fourth-quarter growth now implied at approximately 18% year-over-year.
The firm also highlighted that Confluent’s gross retention rate dipped slightly below 90%, while net revenue retention decreased three percentage points quarter-over-quarter to 114%, though DA Davidson remains bullish on the stock given its after-hours implied valuation of just approximately 4.7 times enterprise value to calendar year 2026 revenue.
In other recent news, Confluent Inc. reported its financial results for the second quarter of 2025, revealing mixed outcomes. The company achieved an earnings per share (EPS) of $0.09, exceeding the anticipated $0.08, but its revenue of $270.8 million fell short of the expected $278.29 million. This revenue miss highlights ongoing challenges in the company’s cloud segment. Analysts have responded with adjustments to their outlooks for Confluent. Needham lowered its price target to $24.00 while maintaining a Buy rating, citing pressures from large customer optimizations. Guggenheim also reduced its price target to $29.00, noting that despite a cloud growth of $7.8 million surpassing estimates, concerns persist. Stifel took a more cautious approach by downgrading Confluent from Buy to Hold, setting a new price target of $21.00 due to significant headwinds in the cloud business. These developments underscore the mixed sentiment among analysts regarding Confluent’s future prospects.
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