Stifel Raises Rating and Target Price for Cloudflare Inc.
Stifel, a brokerage firm, has upgraded its rating on Cloudflare Inc. (NYSE:) and raised its target price, citing increased confidence in the company’s technology development and earnings prospects.
The brokerage firm raised its rating to “Buy” from “Hold” and increased its target price from $95.00 to $136.00, representing a nearly 19% increase from Cloudflare’s Monday close. Stifel views Cloudflare as a “best-in-class asset” and believes its high stock price is justified by the company’s “quality.”
Stifel analysts noted that Cloudflare’s self-help dynamics and solid technology, which is leveraged to many secular trends, can help the company deliver financial and stock outperformance. The brokerage has increasing confidence that Cloudflare can sustain at least 25% to 30% year-on-year top-line growth, along with improved profitability.
The firm also praised Cloudflare’s far-reaching network, which facilitates about 20% of the internet, and believes the company will be able to further leverage this coverage for earnings growth. In addition, Stifel sees early signs that Cloudflare is benefiting from demand for artificial intelligence, given its low-latency network and potential for increased momentum from AI demand.
The brokerage firm also noted that a growing global dependence on the internet is likely to keep demand for Cloudflare’s services upbeat, as the company is one of the largest content delivery network services providers in the world.
