Cloudflare (NYSE:NET) Stock Price Target Lowered at Needham & Company LLC

Key Points

• Needham lowered its Cloudflare price target from $380 to $365 but maintained a Buy rating, implying about 49.7% upside from the price cited in its report.
• Cloudflare’s latest quarter beat estimates: revenue rose 39.2% year over year to $782.5 million, and EPS was $0.38 versus the $0.34 consensus.
• Analyst sentiment remains broadly positive: MarketBeat reported a Moderate Buy consensus and an average price target of $333.61. The article also notes that rapid growth is accompanied by profitability concerns, including lower gross margin and a wider GAAP operating loss.

Cloudflare (NYSE:NET - Get Free Report) had its price target reduced by research analysts at Needham & Company LLC from $380.00 to $365.00 in a research report issued to clients and investors on Friday, Benzinga reports. The firm currently has a "buy" rating on the stock. Needham & Company LLC's price objective indicates a potential upside of 49.72% from the company's current price.

Several other research analysts have also commented on NET. UBS Group initiated coverage on Cloudflare in a report on Tuesday. They set a "buy" rating on the stock. Truist Financial upped their price objective on shares of Cloudflare from $300.00 to $350.00 and gave the company a "buy" rating in a report on Friday, August 7th. Susquehanna raised their price objective on shares of Cloudflare from $200.00 to $300.00 and gave the stock a "neutral" rating in a research report on Monday, August 10th. Mizuho lifted their target price on shares of Cloudflare from $260.00 to $310.00 and gave the stock an "outperform" rating in a research note on Wednesday, July 15th. Finally, Craig Hallum upgraded shares of Cloudflare to a "buy" rating in a report on Tuesday. Twenty-five equities research analysts have rated the stock with a Buy rating, eight have given a Hold rating and four have issued a Sell rating to the company. According to MarketBeat.com, the stock currently has an average rating of "Moderate Buy" and a consensus target price of $333.61.

Cloudflare Price Performance

NYSE:NET opened at $243.79 on Friday. Cloudflare has a one year low of $158.83 and a one year high of $370.35. The company has a debt-to-equity ratio of 1.22, a quick ratio of 1.82 and a current ratio of 1.82. The stock has a market cap of $86.17 billion, a PE ratio of -420.32, a P/E/G ratio of 206.44 and a beta of 1.37. The stock has a 50 day moving average price of $319.02 and a 200 day moving average price of $249.31.

Cloudflare (NYSE:NET - Get Free Report) last announced its quarterly earnings data on Thursday, November 5th. The company reported $0.38 EPS for the quarter, topping analysts' consensus estimates of $0.34 by $0.04. The firm had revenue of $782.51 million for the quarter, compared to the consensus estimate of $737.16 million. Cloudflare had a negative return on equity of 3.88% and a negative net margin of 8.21%. The firm's revenue was up 39.2% compared to the same quarter last year. During the same quarter last year, the business posted $0.27 earnings per share. Equities research analysts expect that Cloudflare will post 0.03 EPS for the current fiscal year.

Insider Buying and Selling at Cloudflare

In other Cloudflare news, CFO Thomas J. Seifert sold 12,500 shares of the company's stock in a transaction dated Monday, October 19th. The shares were sold at an average price of $299.59, for a total value of $3,744,875.00. Following the transaction, the chief financial officer owned 104,958 shares of the company's stock, valued at $31,444,367.22. This represents a 10.64% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Carl Ledbetter sold 5,000 shares of the company's stock in a transaction dated Monday, October 19th. The shares were sold at an average price of $304.40, for a total transaction of $1,522,000.00. Following the completion of the transaction, the director directly owned 868,073 shares in the company, valued at $264,241,421.20. The trade was a 0.57% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 259,057 shares of company stock worth $79,516,905 over the last quarter. 10.66% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Cloudflare

A number of institutional investors and hedge funds have recently made changes to their positions in NET. Jennison Associates LLC increased its position in shares of Cloudflare by 135.8% in the 1st quarter. Jennison Associates LLC now owns 4,394,484 shares of the company's stock valued at $906,758,000 after purchasing an additional 2,530,872 shares during the last quarter. Alyeska Investment Group L.P. acquired a new stake in shares of Cloudflare in the 2nd quarter valued at $75,595,000. Janus Henderson Group PLC lifted its position in shares of Cloudflare by 583.1% during the 1st quarter. Janus Henderson Group PLC now owns 241,367 shares of the company's stock worth $49,805,000 after purchasing an additional 206,032 shares during the last quarter. Styrax Capital LP purchased a new stake in shares of Cloudflare during the 1st quarter worth $41,268,000. Finally, Corient Private Wealth LP lifted its position in shares of Cloudflare by 837.5% during the 2nd quarter. Corient Private Wealth LP now owns 208,103 shares of the company's stock worth $51,044,000 after purchasing an additional 185,906 shares during the last quarter. 82.68% of the stock is owned by hedge funds and other institutional investors.

Cloudflare News Summary

Here are the key news stories impacting Cloudflare this week:

• Positive Sentiment: Q3 revenue increased 39.2% year over year to $782.5 million, above forecasts, while non-GAAP EPS of $0.38 also beat estimates. The company called it a record quarter, with annualized revenue surpassing $3 billion. Cloudflare earnings results
• Positive Sentiment: Cloudflare raised its full-year revenue forecast to about $2.96 billion, from prior guidance of $2.86 billion–$2.87 billion. Its next-quarter revenue outlook was also stronger than analysts expected, supporting optimism about continued demand. WSJ outlook report
• Positive Sentiment: Reports cited enterprise adoption and demand for Cloudflare’s developer platform amid AI workloads as drivers of growth. Shares rallied in after-hours and premarket trading following the results. After-hours earnings coverage
• Neutral Sentiment: Cloudflare appointed Christian Smith president of revenue to lead its global go-to-market organization, with a stated focus on scaling growth. The impact will depend on execution. Revenue leadership appointment
• Negative Sentiment: Despite rapid sales growth, gross margin declined, free cash flow grew much more slowly than revenue, and the GAAP operating loss widened. These trends could temper enthusiasm if growth does not translate into improving profitability. Earnings and profitability analysis

About Cloudflare

Cloudflare, Inc NYSE: NET provides cloud connectivity, security and performance services for websites, applications, corporate networks and other internet-connected resources. Its global network is designed to help organizations improve the reliability, speed and security of digital services while reducing the complexity of managing internet infrastructure.

The company's offerings include content delivery and authoritative domain name system services, distributed denial-of-service protection, web application and application programming interface security, bot management, and network security tools.

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