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On Thursday, Needham analysts revised their price target for Cloudflare Inc . (NYSE: NYSE:NET) shares, reducing it to $145 from the previous $185, while continuing to endorse the stock with a Buy rating. The adjustment came in the wake of Cloudflare’s Investor Day, which took place at the New York Stock Exchange on Wednesday. With a current market capitalization of $41.2 billion and analyst targets ranging from $60 to $200, Cloudflare commands significant attention from Wall Street. According to InvestingPro analysis, the stock appears to be trading above its Fair Value. During the event, Cloudflare’s management confirmed their commitment to the company’s long-term margin model, which is bolstered by consistent unit economics.
The company also announced a delay in their goal to reach $5 billion in revenue, extending the timeline by one year. This revision was attributed to the significantly altered macroeconomic environment compared to the previous calendar year, as well as changes in their go-to-market strategy. Needham’s analysts expressed understanding for this delay, considering the broader economic context. InvestingPro data shows Cloudflare maintaining impressive gross profit margins of 77.3%, with revenue expected to grow 25% in FY2025.
In addition to financial targets, Cloudflare highlighted the unique aspects of its technology infrastructure during the Investor Day. The company emphasized its decision to utilize lightweight Isolates, which Needham analysts noted gives Cloudflare a considerable technological edge over competitors that rely on traditional Virtual Machines and Containers.
The reduction of Cloudflare’s price target by Needham reflects a broader trend of multiple compression within the industry, affecting valuations across Needham’s coverage. Despite the lower price target, the analysts’ continued Buy rating indicates a positive outlook on the stock’s potential performance. While the stock has experienced an 8.9% decline over the past week, it has delivered an impressive 51.9% return over the last six months. For deeper insights into Cloudflare’s valuation and growth prospects, investors can access comprehensive analysis and 14 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Cloudflare Inc. reported a 27% year-over-year revenue increase, surpassing expectations from both Mizuho (NYSE:MFG) Securities and Wall Street, which projected around 25%. The company also noted a 47% rise in customers with annual spending above $1 million during the fourth quarter of 2024. Mizuho Securities raised its price target for Cloudflare to $160, maintaining a Neutral rating, while TD Cowen increased its target to $162 and upheld a Buy rating, citing strong performance and strategic execution. Stifel analysts also maintained a Buy rating with a $175 target, highlighting Cloudflare’s potential in Zero-Trust and Artificial Intelligence. Meanwhile, Cantor Fitzgerald kept a Neutral rating with a $149 target, acknowledging Cloudflare’s growth metrics and strategic initiatives. Mizuho Securities, however, noted a high valuation as a concern despite Cloudflare’s scalable architecture and innovation in AI. Cloudflare has revised its revenue target for 2028 to $5 billion, reflecting confidence in its growth strategy. These developments follow Cloudflare’s Analyst and Investor Days, where the company discussed its market opportunities and financial outlook.
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