Cloudflare (NET +2.02%) stock is seeing another day of impressive gains in Monday's trading. The cybersecurity and web services company's share price was up 3.8% as of 2:45 p.m. ET. Meanwhile, the S&P 500 index was up 0.7%, and the Nasdaq Composite index was up 1.1%. Cloudflare had been up as much as 5.9% earlier in the session.
NYSE: NET
Key Data Points
Following explosive gains in Friday's trading, Cloudflare stock is seeing continued bullish momentum thanks to coverage from analysts. Before the market opened this morning, Mizuho and Susquehanna raised their price targets for the tech company's stock -- and the new estimates are helping lift its share price higher
Cloudflare climbs on price target increases
In a note published this morning, Mizuho analyst Gregg Moskowitz raised his one-year price target on Cloudflare from $130 per share to $160 per share. On the other hand, the analyst still maintained a neutral rating on the stock. As of this writing, the new price target actually suggests potential downside of 7.5% for Cloudflare.
Meanwhile, Susquehanna raised its one-year price target from $95 per share to $170 per share and also maintained a neutral rating on the stock. Susquehanna's new target suggests downside of roughly 1.7% as of this writing.
While Mizuho and Susquehanna both significantly increased their valuation targets for Cloudflare, their neutral ratings and price estimates reflect some concerns about the company's valuation. While both firms had positive things to say about the fourth-quarter results the company published last week, each outlined some concerns about the potential for a more challenging operating backdrop in 2025.
On the other hand, the coverage from the two firms that was published today reflected sentiments that the company is roughly fairly valued at current prices. So even though Mizuho and Susquehanna aren't bullish on Cloudflare at its current valuation range, they still think the company has grown into a valuation that's significantly above their previous targets.
What comes next for Cloudflare?
With the Q4 results that it published after the market closed last Thursday, Cloudflare guided for sales to come in between $2.09 billion and $2.094 billion in 2025. If the company were to hit that target, it would mean delivering annual sales growth of roughly 25%.
But Cloudflare's sales guidance actually fell short of the average Wall Street estimate, which had called for sales of $2.1 billion. Guidance for non-GAAP (adjusted) earnings per share between $0.79 and $0.80 also fell short of the average analyst estimate's call for per-share earnings of $0.85.
Likely even more than its strong Q4 results, Cloudflare's explosive rally at the end of last week was powered by comments from management indicating that the company was potentially on the verge of some major artificial intelligence (AI) breakthroughs. In particular, CEO Matthew Prince drew a parallel between the improvements in AI model training efficiency delivered by DeepSeek and improvements in AI inference efficiency that his own company is seeing.
If Cloudflare can deliver on management's outlook on AI technologies, its share price could continue to climb well above current levels this year. On the other hand, expectations have now been raised -- and that's made the stock a riskier play.
