By Angela Palumbo
Cloudflare stock was rising Tuesday after a Stifel analyst upgraded shares of the cybersecurity company, citing confidence in its growth in the coming year.
Adam Borg upgraded shares of Cloudflare to Buy from Hold and increased his price target to $136 from $95, which implies a 19% increase from the stock's closing price of $114.65 on Monday.
"We believe Cloudflare is positioned to deliver improving execution, and upside to numbers, against a massive and growing [total addressable market]," Borg wrote in a research note. He added that he believes the company can sustain at least 25% to 30% year-over-year top-line growth, along with improving profitability down the line.
Borg's upgrade comes after the stock has risen 41% this year, despite dropping 4.6% on Nov. 8 after revenue guidance disappointed. Software stocks across the board have widely been performing well as enterprises spend big on generative-AI initiatives. Borg sees Cloudflare as a continued beneficiary of this spending in the year ahead.
"With increasingly hybrid environments, a growing reliance on the internet for mission-critical scenarios, and the heightened cybersecurity threat landscape, we expect organizations to continue embracing modern cloud-delivered network and security solutions as traditional approaches are increasingly insufficient," Borg said.
Shares of Cloudflare were rising 2.8% Tuesday to $117.82 and were on pace for their highest close since April 13, 2022, according to Dow Jones Market Data. The tech-heavy Nasdaq was down 0.3%.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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December 17, 2024 16:00 ET (21:00 GMT)
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