NET - Cloudflare Wows Analysts with Strong Q4 Results Signals Robust Growth Ahead | Benzinga
Cloudflare Inc (NYSE:NET) analysts bumped their forecasts after upbeat fourth-quarter results. The stock gained over 20% Friday.
Cantor Fitzgerald analyst Yi Fu Lee assumed a Neutral rating and raised the price target to $100 from $70.
Cloudflare delivered its strongest quarter in 2023 to finish the year, exceeding FactSet consensus estimates on revenue (+2.7 upside), operating income (+37%), EPS (+25%), and free cash flow (FCF, +4.2%). Lee noted the outperformance as driven by an improvement in the go-to-market execution translating into normalized sales execution/cycle-winning mega transactions.
Cloudflare signed its most prominent new logo with an expected total contract value (TCV) +$30 million and the largest customer renewal with a TCV of ~$60 million.
Even more encouraging, the pipeline close rates, sales force productivity, average deal size, and linearity all improved sequentially.
While the analyst appreciated Cloudflare’s strong execution to close 2023, he noted 2024 revenue guidance calls for +27% Y/Y growth and an FCF margin of ~10%, locking the company out of the Rule of 40 standard, a metric attained commonly by tier 1 software peers. As such, he remains disciplined in his valuation and will patiently wait for a better entry point.
Oppenheimer analyst Timothy Horan had an Outperform rating and raised the price target to $122. The fourth-quarter revenue grew 32% Y/Y to $362 million, a 350 bps ...