Robert W. Baird analyst Shrenik Kothari has maintained their neutral stance on NET stock, giving a Hold rating on July 30.
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Shrenik Kothari’s rating is based on a combination of factors that reflect both the strengths and challenges facing Cloudflare. The company reported a robust second quarter with a 28% year-over-year growth, driven by advancements in AI and improved net revenue retention. However, despite these positive indicators, the stock’s valuation remains high, trading at a premium multiple, which limits the potential risk/reward balance for investors.
While Cloudflare’s long-term prospects are promising, particularly with its edge-native AI initiatives and emerging content and payments strategies, the current valuation and variability in usage-based revenue present challenges. The company’s execution in scaling its usage-based pool-of-fund deals and managing macroeconomic uncertainties will be critical. As such, Kothari maintains a Hold rating, recognizing the high expectations already embedded in the stock’s current price.
In another report released on July 30, J.P. Morgan also maintained a Hold rating on the stock with a $135.00 price target.