Shares of Cloudflare (NET 0.43%) have popped today, up by 11% as of 12:50 p.m. EDT, after the company received some positive comments from Wall Street. Needham analyst Alex Henderson boosted his price target on the stock from $32 to $38 while reiterating a buy rating.
Henderson believes that Cloudflare will enjoy strong demand for its products and services as more companies continue shifting to the cloud. It will also benefit from ongoing adoption of 5G edge computing, in Henderson's view. The analyst also points to Cloudflare's continued focus on innovation, such as recently introducing a new feature that could allow its services to process traffic 40% faster than before.
The price target boost comes after Needham last month had increased its valuation estimate from $24 to $32, citing booming global demand for Cloudflare's offerings evidenced by strong growth in the first quarter across most geographical segments.
Despite the increased price target, Henderson's estimates for the second quarter are below consensus, as well as Cloudflare's guidance. The analyst is modeling for the company to report a net loss per share of $0.11 in Q2, worse than the consensus estimate of $0.06 per share in red ink.
The tech company's outlook for the second quarter calls for an adjusted net loss per share of $0.05 to $0.06 on revenue of $93.5 million to $94.5 million. Adjusted operating loss is forecast at $19 million to $20 million.