On Thursday, Stifel maintained its Hold rating on Cloudflare Inc . (NYSE: NYSE:NET) but lowered the stock's price target from $90.00 to $80.00. Cloudflare recently hosted its annual Cloudflare Connect user conference and investor day, where the company outlined its expanding Connectivity Cloud strategy. At this event, the company also announced an expanded partnership with CrowdStrike (NASDAQ:CRWD) and the acquisition of BastionZero.
During the conference, Cloudflare reaffirmed its long-term business model and the new President of Revenue discussed the company's market approach. Emphasis was placed on Cloudflare's increasing focus on the enterprise segment and enhancing its partner ecosystem. This strategy aims to capitalize on a $222 billion addressable market that the company sees as a growth opportunity in the coming years.
Cloudflare's executives also addressed the current economic climate, acknowledging the ongoing uncertainty mentioned in a recent earnings call. Despite this, the company expressed confidence in its ability to execute its strategy across an expanding total addressable market (TAM). Cloudflare's modern technology stack is believed to deliver significant return on investment (ROI), which supports the company's outlook for sustained growth.
The company's outlook is positive, with expectations to drive 25%-30%+ growth and improvements in operating margin and free cash flow (FCF) in the future. Cloudflare's announcements and reaffirmations at the conference have led to increased confidence in its ability to seize opportunities across its various focus areas.
InvestingPro Insights
In light of Cloudflare Inc.'s recent strategies and market approach, InvestingPro data indicates a strong gross profit margin of 76.78% in the last twelve months as of Q1 2024, which underscores the company's efficiency in managing its cost of goods sold relative to its revenue. This aligns with the company's focus on ROI and operational efficiency mentioned during their annual Cloudflare Connect user conference.
Despite a challenging economic climate, Cloudflare is expected to grow its net income this year, as suggested by the 16 analysts who have revised their earnings upwards for the upcoming period. This optimism is reflected in Cloudflare's market capitalization of 23.1 billion USD and a substantial revenue growth of 31.51% in the last twelve months as of Q1 2024, indicating a strong trajectory in expanding its market share within the $222 billion addressable market.
While the stock has experienced a downturn over the past month with a -13.96% return, the long-term perspective remains promising with a high return over the last decade. Investors may also note that Cloudflare does not pay a dividend, which could be a consideration for those seeking income-generating investments. For those interested in further insights, InvestingPro offers additional tips on Cloudflare, and by using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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