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Investing.com - Piper Sandler raised its price target on Cloudflare Inc. (NYSE:NET) to $249.00 from $224.00 on Friday, while maintaining a Neutral rating on the stock. The new target aligns closely with Cloudflare’s current trading price of $248.25, which has surged an impressive 153.68% over the past year.
The firm cited Cloudflare’s ability to exceed expectations through "wicked" execution, noting that the company’s remaining performance obligations (RPO) accelerated once again and net-customer count was impressive, particularly in the upmarket segment. This execution has helped drive Cloudflare’s strong 27.32% revenue growth over the last twelve months.
Piper Sandler highlighted that Cloudflare achieved record annual contract value (ACV) bookings for the quarter, with increased sales capacity and productivity. The company’s net retention rate (NRR) expanded 5% quarter-over-quarter. InvestingPro data shows Cloudflare maintains impressive 76.14% gross profit margins, though the company is not yet profitable over the last twelve months.
The research firm pointed to Cloudflare’s success in key markets including AI, SASE (Secure Access Service Edge), and AI "paywall" solutions. Piper Sandler considers Cloudflare "one of the most impressive infrastructure names" in its coverage universe that is maintaining persistent growth. This aligns with InvestingPro analysis, which notes that 28 analysts have revised their earnings upwards for the upcoming period, with expectations that the company will become profitable this year.
Despite the positive performance, Piper Sandler remains sidelined on the stock due to valuation concerns, noting that the "+1x EV/Rev/Growth" ratio is "too rich" for their investment thesis, though they would become "constructive on a pullback." This caution appears justified as InvestingPro data indicates Cloudflare is currently overvalued, trading at a high Price/Book multiple of 59.88 and near its 52-week high. For deeper insights into Cloudflare’s valuation metrics and growth prospects, check out the comprehensive Pro Research Report available for this high-momentum tech stock.
In other recent news, Cloudflare Inc . has seen a series of positive developments following its third-quarter results. The company reported a 31% year-over-year revenue growth, surpassing expectations and previous guidance. This impressive performance has led several analyst firms to raise their price targets for Cloudflare. UBS increased its target to $245, maintaining a Neutral rating, while Citizens raised its target to $270, citing the effective leadership of CEO Matthew Prince and Mark Anderson. Mizuho also boosted its price target to $280, noting the strong quarterly results that exceeded Wall Street’s expectations. RBC Capital raised its target to $265, highlighting accelerating performance metrics such as remaining performance obligations and dollar-based net retention rate. Jefferies adjusted its price target to $250 and maintained a Hold rating, acknowledging the company’s highest revenue beat in nearly four years. These developments reflect a generally positive sentiment among analysts regarding Cloudflare’s future prospects.
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