Buy Rating for Cloudflare Amid Strong Performance and Positive Market Outlook

In a report released yesterday, Shrenik Kothari from Robert W. Baird maintained a Buy rating on Cloudflare (NET – Research Report), with a price target of $100.00.

Shrenik Kothari has given his Buy rating due to a combination of factors including Cloudflare’s consistent performance and positive market indicators. He highlights the company’s ability to narrowly surpass revenue estimates over the last six quarters, demonstrating reliable execution despite slightly lower beat rates compared to previous years. Kothari points to Cloudflare’s inclusion in the Gartner SSE Magic Quadrant and recent product announcements as signs of a strong competitive position. Moreover, he notes the conservative nature of the company’s full-year guidance and management’s optimistic tone, suggesting a potential for upside in the 2024 forecasts.

Kothari also emphasizes the company’s improved channel strategy, as indicated by a positive shift in its channel sentiment and pipeline strength for the upcoming quarter. The analyst report reflects significant channel growth, with Cloudflare’s channel partner revenue surging year over year and accounting for a meaningful portion of total revenue. This robust demand for Cloudflare’s security services, combined with substantial renewals, upsells, and large deal activity, including deals worth over $10 million, underpin Kothari’s Buy rating. Despite facing its toughest year-over-year comparisons in the first quarter, Cloudflare’s easing comps in the following quarters and strong quarter-over-quarter channel performance suggest a favorable setup for sustained growth.

Kothari covers the Technology sector, focusing on stocks such as Fortinet, Zscaler, and Cloudflare. According to TipRanks, Kothari has an average return of 25.6% and a 77.12% success rate on recommended stocks.

In another report released on April 15, RBC Capital also maintained a Buy rating on the stock with a $108.00 price target.

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Cloudflare (NET) Company Description:

Founded in 2009 and headquartered in California, Cloudflare, Inc. is a web infrastructure and website security company. The company operates a cloud platform and provides an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and Internet of Things (IoT) devices.