Shares of cybersecurity firm Cloudflare (NET 1.66%) were up Friday, gaining 3.9% as of 12:30 p.m. ET. The stock was up as much as 5.4% earlier in the day. The leg up comes as the S&P 500 (^GSPC 0.27%) and the Nasdaq Composite (^IXIC 0.28%) were up 1% and 1.7%, respectively.
NYSE: NET
Key Data Points
An analyst at Citigroup upgraded Cloudflare's rating, helping to boost the stock.
Higher highs
In a research report on Friday, Citi's Fatima Boolani upgraded Cloudflare from neutral to buy, adjusting her price target for Cloudflare stock from $95 to $145. The new target represents a roughly 20.8% upside from its current level.
The report explained that the company is in a prime position to grow revenue, and that any "productivity pains" Cloudflare experienced in years past would not be present in 2025. Citi is confident that the firm can deliver 27% to 30% revenue growth for the foreseeable future. Given the "clearly ample optimism already embedded in the stock" -- it currently trades at a hefty forward price-to-earnings ratio (P/E) of 134 -- Cloudflare will need to deliver that sort of growth consistently, or shares could slump.
Inflation was slightly lower than expected
The recent Consumer Price Index (CPI) data released Wednesday is also likely helping lift Cloudflare's stock. Cloudflare is a growth stock, typically sensitive to changes in interest rates. The lower-than-expected numbers may mean the Federal Reserve delivers more or larger rate cuts in the coming year -- good news for a company like Cloudflare.
