Bank of America just raised its EUR/USD forecast
On Friday, Evercore ISI adjusted its financial outlook for Confluent Inc (NASDAQ:CFLT) stock, reducing the price target to $28 from $33, while keeping an Outperform rating on the company's shares. The adjustment follows recent discussions with the company's management, partners, and customers, which reinforced the analyst's positive view of Confluent's long-term potential and the strength of its streaming platform.
The firm acknowledges the growing demand for real-time data streaming and stream processing, driven by the rise of GenAI-powered use cases. These developments are expected to contribute to the ubiquity of data streaming in the long term. However, the firm anticipates that it may take several quarters for these factors to significantly impact revenue growth, as production use cases are still in the early stages.
Evercore ISI has revised its financial estimates for Confluent, projecting a more stable revenue performance in the first half of the fiscal year 2025 and anticipating revenue acceleration in the second half. This revision aligns more closely with current Street estimates. The firm has also released its fiscal year 2026 estimates, which are largely consistent with those for fiscal year 2025.
Despite the near-term challenges, Evercore ISI remains optimistic about Confluent's prospects over multiple quarters. The firm expects the company's management to continue providing cautious guidance, influenced by ongoing optimizations and an uncertain macroeconomic environment. The new price target of $28 is based on 8.7 times the enterprise value to the projected calendar year 2025 revenue, or approximately 7 times the enterprise value to the projected calendar year 2026 revenue.
In other recent news, Confluent Inc. has reported a significant 27% increase in subscription revenue to $225 million and a 40% rise in Confluent Cloud revenue to $117 million. The company also added 320 new customers during this period. However, the net revenue retention of 118% fell slightly short of its target range. Confluent also announced the appointment of Kong Phan as its new Chief Accounting Officer.
Goldman Sachs maintained a neutral rating on Confluent, while Guggenheim reaffirmed its buy rating, citing the company's strong positioning in the data streaming market. Mizuho Securities and DA Davidson also maintained their positive outlooks on Confluent, emphasizing its potential for growth. These developments reflect the recent strategic and financial strides made by Confluent in the data streaming market.
InvestingPro Insights
In light of Evercore ISI's revised financial outlook for Confluent Inc (NASDAQ:CFLT), InvestingPro data reveals key metrics that may be of interest to investors evaluating the company's current standing and future prospects. Confluent holds a market cap of approximately $6.67 billion and, despite not being profitable over the last twelve months, analysts predict the company will turn a profit this year. This aligns with Evercore ISI's positive long-term view of the company's potential.
InvestingPro Tips indicate that Confluent's balance sheet is robust, with more cash than debt, and liquid assets exceeding short-term obligations. However, the stock has experienced a significant price drop over the last six months, trading at a high Price/Book multiple of 7.63. This could suggest that the market has high expectations for the company's asset value and future earnings. With a recent price close at $20.66 and an InvestingPro Fair Value estimate of $23.53, there appears to be potential for upside if the company can capitalize on the growing demand for real-time data streaming.
For investors seeking further guidance, there are more InvestingPro Tips available, which could provide additional insights into Confluent's performance and potential investment opportunities. Visit https://www.investing.com/pro/CFLT for a comprehensive list of tips and in-depth analysis.
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