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On Friday, Needham analysts showed a positive stance on Cloudflare Inc . (NYSE: NYSE:NET) by raising their price target on the company’s shares to $185 from $160, while maintaining a Buy rating. The adjustment follows Cloudflare’s recent performance, which included a notable increase in customer volume and quality, signaling a successful go-to-market strategy. The stock has demonstrated remarkable momentum, with a 69.79% return over the past year and is currently trading near its 52-week high of $144.30. According to InvestingPro analysis, the company appears to be trading above its Fair Value.
Cloudflare has reportedly added a record number of paying customers, marking the fourth consecutive quarter of accelerated year-over-year growth. With impressive gross profit margins of 77.53% and revenue growth of 30.04% in the last twelve months, the company has shown strong financial execution. Notably, over half of the new customer logos contributing more than $1 million each in the calendar year 2024 were secured during the December quarter. The company’s sales representative productivity also saw a double-digit percentage increase for the fifth straight quarter. For deeper insights into Cloudflare’s financial health and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, one of 1,400+ available detailed company analyses.
The management at Cloudflare anticipates a significant uptick in Ramped Rep Capacity starting in the second quarter of the calendar year 2025. This expected increase is poised to contribute to the company’s growth trajectory. Additionally, management indicated that Pool (NASDAQ:POOL) of Funds deals are likely to generate more substantial revenue in the second half of the calendar year 2025, which would result in a stronger seasonal weighting towards the latter part of the year.
These factors combined have led Needham to adopt a more bullish outlook on Cloudflare’s financial prospects. The new price target is based on a 31x enterprise value to sales multiple applied to Needham’s revenue estimate for Cloudflare in the calendar year 2025. The analyst’s comments underscore the company’s impressive quarterly results and the expectation of continued strong performance moving forward.
In other recent news, Cloudflare Inc. has seen significant developments, including robust Q4 2024 earnings, which aligned with FY25 consensus expectations. This was followed by Bernstein SocGen Group raising the price target for the company’s shares from $80 to $100. The company’s revenue exceeded guidance by 1.9%, the highest outperformance since the same quarter last year, and its customer base growth was notably strong. Operational efficiency remained a highlight, with the company surpassing consensus expectations in Non-GAAP Operating Margin while investing in sales and capital expenditures.
Cloudflare also maintained its Neutral rating, according to BTIG, after reporting a revenue of $459.9 million, a 26.9% year-over-year increase. The company’s midpoint guidance for 2025 anticipates revenues of $2.092 billion, marking a 25.3% year-over-year growth. Cloudflare has also been successful in securing larger deals, with over half of the 55 customers in the $1 million-plus cohort being added in the last quarter of 2024.
In other developments, Cloudflare recently appointed Michelle Zatlyn as Co-Chair of the Board, reflecting the company’s commitment to strong leadership. This was disclosed in a recent 8-K filing with the Securities and Exchange Commission. Lastly, Needham raised its price target for Cloudflare from $110 to $160, anticipating enhanced results following recent changes to the company’s go-to-market strategy.
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