What happened
A pair of analyst price-target cuts dampened sentiment on Cloudflare (NET 2.05%) stock on Monday, driving the company's share price down by almost 5% on the day. By contrast, the S&P 500 index essentially traded flat.
So what
Joining several other prognosticators who have become more bearish on Cloudflare's future, Goldman Sachs's Gabriela Borges and Credit Suisse's Sami Badri both reduced their targets on the stock Monday morning before market open.
Of the two, it's Badri who has the sunnier view on the cybersecurity company's future. He lowered his price target by $20 per share, but it still stands at a relatively lofty $75. Badri also maintained his outperform (i.e., "buy") recommendation.
As for Borges, she cut her level to $38 per share from the preceding $51. She was and is firmly in the bear camp on Cloudflare, as she kept her "sell" tag on the stock intact.
The reasoning behind the two chops wasn't immediately apparent, but it's no coincidence they were enacted one trading day after Cloudflare unveiled its latest set of quarterly earnings.
While first-quarter revenue and profitability topped analyst projections, investors got an unpleasant shock from the company's revenue guidance. For the current (second) quarter, Cloudflare expects to reach $305 million to $306 million. However, the average prognosticator estimate is $319 million. Similarly, full-year 2023 revenue is expected to hit roughly $1.28 billion, but the collective analyst projection is $1.33 billion.
Now what
On Friday, Borges and Badri's peer Michael Romanelli of Mizuho Securities was one of several analysts making an immediate post-earnings cut to Cloudflare's target price.
In reducing his target price to $49 per share from $60, Romanelli wrote that although the company "possesses highly scalable architecture and a culture of strong innovation," weak execution and other negative factors are affecting its performance.
