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Investing.com - Needham has lowered its price target on Confluent Inc (NASDAQ:CFLT) to $24.00 from $26.00 while maintaining a Buy rating on the data streaming platform provider. According to InvestingPro data, the company maintains a FAIR financial health score, with particularly strong liquidity metrics showing current assets significantly exceed short-term obligations.
The price target reduction follows Confluent’s second-quarter 2025 results, which exceeded guidance and sell-side models but fell short of investor expectations due to ongoing pressures from large customer optimizations and slower adoption of new use cases. Despite challenges, the company maintains strong revenue growth of 24.1% over the last twelve months, reaching $1.02 billion.
Needham highlighted that month-over-month consumption trends in the second quarter were "flattish to slightly down" compared to the first quarter, indicating continued pressure on Confluent’s cloud business.
A significant development impacting the outlook is a large AI-native customer’s decision to move toward self-management by signing a platform deal in the third quarter, which will create an additional low single-digit year-over-year growth headwind for Confluent’s cloud business in the fourth quarter of 2025.
Confluent management has outlined several strategic initiatives to reinvigorate growth, which show promising initial results according to Needham, though these efforts will take time to yield meaningful outcomes.
In other recent news, Confluent Inc. reported its financial results for the second quarter of 2025, showing a mixed performance. The company exceeded earnings per share (EPS) expectations with an EPS of $0.09, compared to the anticipated $0.08. However, Confluent’s revenue fell short of forecasts, coming in at $270.8 million against the expected $278.29 million. Despite this, the company’s cloud growth showed positive signs, with new annual recurring revenue (ARR) reaching $7.8 million, surpassing consensus estimates of $7 million.
Guggenheim responded to these results by lowering its price target for Confluent to $29.00, while maintaining a Buy rating. The firm expressed concerns over cloud growth, despite the positive new ARR figures. Stifel also adjusted its stance on Confluent, downgrading the stock from Buy to Hold and reducing the price target to $21.00. Stifel cited significant challenges in Confluent’s cloud business, including usage optimization by existing customers and slowing activity in new workloads. These developments highlight the mixed reactions from analysts regarding Confluent’s recent performance and future prospects.
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