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Investing.com - Stifel has raised its price target on Confluent Inc (NASDAQ:CFLT) to $25.00 from $21.00 while maintaining a Hold rating, citing improved cloud performance. The data streaming platform provider, currently valued at $8.34 billion, has shown strong momentum with 23% year-over-year revenue growth according to InvestingPro data.
The firm noted Confluent posted "a solid quarter" with 200 basis points of cloud upside, driven by sequential improvement in consumption as optimization trends normalize. The company also saw sustained momentum in new use cases moving to production, with a 40% quarter-over-quarter increase in late-stage pipeline progression. With a healthy current ratio of 3.98 and impressive gross margins of 74.22%, the company maintains strong operational efficiency.
Confluent’s Flink Cloud ARR growth was robust at 70% quarter-over-quarter, while operating margin came in approximately 270 basis points above expectations. The company is beginning to see sales and marketing leverage, which represented 37% of revenue compared to 40% in the previous quarter and 42% year-over-year.
Net revenue retention (NRR) stabilized quarter-over-quarter at 114%, though Stifel believes NRR is likely to decline in coming quarters due to "meaningful headwinds from the genAI Cloud customer moving to self-managed."
Despite the positive quarter and apparent benefits from recent go-to-market changes, Stifel maintained its Hold rating until it gains "confidence in the company’s ability to deliver more consistent execution." The new $25 price target represents 5.5 times Confluent’s calendar year 2027 revenue. InvestingPro analysis suggests the stock is fairly valued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of Confluent among 1,400+ top US stocks.
In other recent news, Confluent Inc’s third-quarter results have prompted several analyst firms to adjust their price targets for the company. Truist Securities raised its price target to $29, citing improved cloud growth and a strong performance that exceeded their estimates. Similarly, DA Davidson also increased their target to $29, describing the quarter as a "solid beat and raise," with optimizations returning to healthy levels. TD Cowen adjusted its price target to $27, noting a "solid bounce back quarter" with subscription revenue surpassing expectations. Piper Sandler raised its target to $28, highlighting improved execution and the first increase in cloud expectations this year. Meanwhile, Bernstein reiterated an Outperform rating with a $31 price target, emphasizing growth confidence from Flink acceleration and a significant increase in late-stage cloud pipeline projects. The company’s net revenue retention rate remained stable at 114%, and revenue purchase obligations grew 43% year-over-year. These developments reflect a positive outlook from analysts following Confluent’s recent performance.
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