CFLT - Confluent's Promising Path To Profitability (Rating Upgrade)

2024-03-20 14:39:13 ET

Summary

• Confluent, Inc. has anticipated revenue growth rates of 27% CAGR in 2024 and a trajectory towards achieving 4% non-GAAP operating margins, validating my decision to change my rating from sell to buy.
• Despite challenges in navigating a crowded competitive landscape, Confluent's leadership position in the data streaming market and strategic partnerships bolster its position for sustained success.
• Confluent's near-term prospects show a promising improvement in profitability, influencing my recommendation positively.

Investment Thesis

Confluent, Inc. ( CFLT ) is a contentious stock. The business's growth rates are moderating. More specifically, despite management declaring that this business can grow at 30% CAGR, including the presumption of revenue beats each quarter of 2024, its growth rates will still be sub 30%....

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