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On Friday, Piper Sandler analyst at the research firm updated the price target for Cloudflare Inc . (NYSE: NYSE:NET) shares, increasing it significantly to $153.00 from the previous target of $92.00. The firm has retained its Neutral rating on the stock. The adjustment comes as the stock has shown remarkable momentum, with an 85% surge over the past six months and a 31% gain year-to-date. According to InvestingPro analysis, the stock is currently trading above its Fair Value. The management’s narrative focused on several positive factors, including advancements in AI-inferencing, gains in Secure Access Service Edge (SASE), productivity improvements, potential for proof of concept or consolidation, and an uptick in billings.
The company’s Net Retention Rate (NRR) has shown signs of stabilization, and amidst a market environment where growth is scarce, Cloudflare’s story appears to be resonating with investors more than the raw numbers at this stage. The company maintains impressive gross profit margins of 77.5% and operates with strong liquidity, as evidenced by a healthy current ratio of 3.37. The initial guidance for 2025 is sparking discussions about whether the projections are too conservative, especially considering the increasing mix of usage-based revenue. Despite these debates, Cloudflare’s management has expressed confidence in the changes made within the sales organization over the past year, the growth in sales capacity and productivity heading into 2025, and the broader IT spending environment related to Cloudflare’s market segments.
The analyst highlighted Cloudflare’s position as a long-term winner in infrastructure and pointed to the upcoming analyst day on March 12 as the next potential catalyst for the company. The decision to maintain a Neutral stance on the stock is influenced by the current expectations and valuation, which is already high, with the enterprise value to revenue to growth (EV/Rev/Growth) ratio exceeding 1x. This aligns with InvestingPro data, which shows the stock trading at a significant premium with a Price/Book ratio of 49.9x. For deeper insights into Cloudflare’s valuation and over 15 additional ProTips, including detailed financial health metrics, subscribers can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Cloudflare has seen a series of positive adjustments from various analyst firms following its strong financial performance. Stifel raised Cloudflare’s stock price target to $175, citing the company’s impressive performance and potential for continued growth. Cantor Fitzgerald also lifted its price target for Cloudflare to $149, acknowledging the firm’s solid sales execution and potential for growth. Needham echoed this sentiment, raising its price target for the company’s shares to $185, following a notable increase in customer volume and quality.
In line with these developments, Bernstein SocGen Group adjusted its outlook on Cloudflare shares, increasing the price target from $80 to $100. The revision followed Cloudflare’s robust Q4 2024 earnings, which aligned with FY25 consensus expectations. BTIG maintained its Neutral rating on Cloudflare after the company reported a 26.9% year-over-year increase in revenue, surpassing both BTIG’s and the Street’s estimates.
These recent developments reflect the analysts’ confidence in Cloudflare’s strategic moves and its potential to capitalize on market opportunities. The company’s focus on expanding its offerings and strengthening its position in the competitive tech landscape has garnered analyst attention and investor interest.
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