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Cloudflare: Not Good Enough

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Update - Dec. 2, 2024

Don't get this upgrade from Morgan Stanley. Cloudflare is twice as expensive as SentinelOne and the analyst chose to downgrade SentinelOne.

-The analysts upped their rating on Cloudflare to Overweight from Equal-Weight as the firm believes there is a path to "sustainable" 25% to 30% revenue growth over the next few years, stemming from multiple product cycles, growing contribution of artificial intelligence at the edge and a fully ramped enterprise sales force.

-"We think the stock sustains a premium valuation on higher estimates as growth remains stronger for longer," the analysts wrote.

-new PT of $130. 


Original article posted on Nov. 12

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  • Cloudflare has a strong business potential in AI and network security, with Q3 revenues up nearly 28% and $1.8 billion in cash.
  • Despite a great quarter, Cloudflare's Q4 revenue guidance of $451-$452 million fell short of the $456 million consensus.
  • The company is reworking its sales force, with some larger U.S. deals slipping out of Q3 but remaining active in the pipeline.
  • My rating remains Neutral on the stock due to its current stock valuation, despite its strong cash flow and business opportunities.
Cloudflare, Inc. (NYSE:NET) appears set to make another major run, but the stock valuation isn't appealing here. The company operates on the connection between AI and cybersecurity, providing the opportunity for strong growth in the years ahead. My investment thesis remains Neutral, at best, on the stock despite another great quarterly report.

Read the full article on Seeking Article. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

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