Bank of America Securities analyst Madeline Brooks maintained a Sell rating on Cloudflare (NET – Research Report) yesterday and set a price target of $52.00.
Madeline Brooks has given her Sell rating due to a combination of factors affecting Cloudflare’s forecast and market position. Although Cloudflare exceeded the fourth quarter estimates, Brooks points out that the company’s guidance for the coming year only aligns with current market expectations, which breaks their pattern of historically projecting above Street estimates. This conservative guidance may reflect underlying challenges, such as the increasing commoditization in web security and Secure Access Service Edge (SASE) markets, which could limit future revenue growth potential.
Furthermore, despite Cloudflare’s strong performance in SASE and Zero Trust solutions, Brooks believes that the market has overly reacted to the positive earnings report. She notes that the stock’s significant after-hours price surge does not account for its underperformance compared to peers and the broader NASDAQ over the year. With Cloudflare trading at a premium to its peers and facing a commoditizing SASE market without new growth catalysts, Brooks maintains a cautious stance on the stock’s valuation and potential upside.
NET’s price has also changed moderately for the past six months – from $66.590 to $90.310, which is a 35.62% increase.
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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.
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