Cloudflare (NYSE:NET) Rating Lowered to Strong Sell at Zacks Research

Key Points

• Zacks Research downgraded Cloudflare to “strong sell” from “hold,” contrasting with the broader analyst consensus of “Moderate Buy” and an average price target of $330.59.
• Cloudflare reported stronger-than-expected quarterly results, with EPS of $0.29 versus the $0.27 consensus and revenue of $696.06 million, up 35.9% year over year.
• Insiders sold 458,839 shares worth approximately $138.2 million over the past 90 days, while institutional investors and hedge funds collectively owned 82.68% of the stock.

Cloudflare (NYSE:NET - Get Free Report) was downgraded by equities researchers at Zacks Research from a "hold" rating to a "strong sell" rating in a research note issued on Wednesday, Zacks reports.

NET has been the topic of a number of other research reports. Cantor Fitzgerald reiterated a "neutral" rating and issued a $340.00 target price on shares of Cloudflare in a research report on Monday, October 5th. Raymond James Financial began coverage on Cloudflare in a research report on Tuesday, July 7th. They set a "strong-buy" rating for the company. Needham & Company LLC lifted their price target on Cloudflare from $280.00 to $380.00 and gave the company a "buy" rating in a research report on Friday, August 7th. The Goldman Sachs Group reissued a "buy" rating and issued a $389.00 price target on shares of Cloudflare in a report on Friday, August 7th. Finally, Piper Sandler upped their price objective on Cloudflare from $250.00 to $333.00 and gave the stock an "overweight" rating in a research report on Friday, August 7th. One analyst has rated the stock with a Strong Buy rating, twenty-one have given a Buy rating, six have issued a Hold rating and five have issued a Sell rating to the company's stock. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and an average target price of $330.59.

Cloudflare Stock Performance

NET opened at $314.76 on Wednesday. The company has a market cap of $111.26 billion, a P/E ratio of -542.69, a price-to-earnings-growth ratio of 257.95 and a beta of 1.65. The company has a quick ratio of 1.82, a current ratio of 1.82 and a debt-to-equity ratio of 1.22. The firm's 50-day moving average price is $319.61 and its 200-day moving average price is $263.78. Cloudflare has a 52-week low of $158.83 and a 52-week high of $370.35.

Cloudflare (NYSE:NET - Get Free Report) last released its earnings results on Thursday, August 6th. The company reported $0.29 EPS for the quarter, topping analysts' consensus estimates of $0.27 by $0.02. Cloudflare had a negative net margin of 8.21% and a negative return on equity of 3.88%. The company had revenue of $696.06 million during the quarter, compared to analysts' expectations of $664.66 million. During the same period last year, the business earned $0.21 EPS. Cloudflare's revenue for the quarter was up 35.9% on a year-over-year basis. Cloudflare has set its Q3 2026 guidance at 0.340-0.340 EPS and its FY 2026 guidance at 1.250-1.260 EPS. As a group, equities analysts anticipate that Cloudflare will post 0.03 EPS for the current fiscal year.

Insider Activity

In other news, CFO Thomas Seifert sold 10,000 shares of the firm's stock in a transaction dated Thursday, September 17th. The stock was sold at an average price of $332.46, for a total transaction of $3,324,600.00. Following the sale, the chief financial officer directly owned 107,902 shares in the company, valued at $35,873,098.92. This trade represents a 8.48% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Alissa Michelle Starzak sold 2,538 shares of the firm's stock in a transaction dated Tuesday, August 18th. The shares were sold at an average price of $304.68, for a total value of $773,277.84. Following the sale, the insider owned 112,082 shares in the company, valued at $34,149,143.76. This trade represents a 2.21% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 458,839 shares of company stock valued at $138,172,392. Insiders own 10.66% of the company's stock.

Institutional Trading of Cloudflare

Institutional investors have recently bought and sold shares of the business. Armstrong Advisory Group Inc. increased its position in shares of Cloudflare by 31.2% in the third quarter. Armstrong Advisory Group Inc. now owns 164 shares of the company's stock valued at $57,000 after buying an additional 39 shares in the last quarter. CX Institutional lifted its position in shares of Cloudflare by 49.4% during the 2nd quarter. CX Institutional now owns 133 shares of the company's stock valued at $33,000 after buying an additional 44 shares in the last quarter. Wealth Architects LLC grew its stake in Cloudflare by 4.6% in the 2nd quarter. Wealth Architects LLC now owns 1,022 shares of the company's stock valued at $251,000 after acquiring an additional 45 shares during the period. Cornerstone Financial Management LLC grew its stake in Cloudflare by 65.3% in the 2nd quarter. Cornerstone Financial Management LLC now owns 119 shares of the company's stock valued at $29,000 after acquiring an additional 47 shares during the period. Finally, Forum Financial Management LP grew its stake in Cloudflare by 3.5% in the 2nd quarter. Forum Financial Management LP now owns 1,498 shares of the company's stock valued at $367,000 after acquiring an additional 50 shares during the period. 82.68% of the stock is owned by institutional investors and hedge funds.

Cloudflare Company Profile

Cloudflare, Inc is a connectivity cloud company that provides services designed to help organizations make their websites, applications and networks more secure, reliable and faster. Its global network sits between users and the services they access, supporting content delivery, domain name system services, traffic optimization and protection against distributed denial-of-service attacks and other online threats.

The company offers a range of application and network security products, including web application firewalls, bot management, application programming interface protection, zero-trust security and secure access services.

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