William Blair analyst Jason Ader has maintained their bullish stance on CFLT stock, giving a Buy rating on July 29.
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Jason Ader has given his Buy rating due to a combination of factors that highlight both challenges and opportunities for Confluent. Despite the company’s shares dropping significantly after-market due to a weaker outlook for Confluent Cloud, Ader recognizes the potential for long-term growth driven by increasing demand for real-time data streaming and the expansion of Confluent’s product offerings. The report acknowledges investor concerns over inconsistent execution and forecasting difficulties, but it also points to the company’s low valuation as a reason to remain optimistic.
Confluent’s second-quarter performance showed respectable growth in subscription revenue, Confluent Cloud, and Confluent Platform, with the latter seeing strength particularly in the financial services sector. Although there are pressures from cost optimization efforts by large customers, the company’s non-GAAP operating margin exceeded expectations, indicating effective management of operating efficiencies. Additionally, while Confluent Cloud’s growth may decelerate, the company’s guidance for fiscal 2025 subscription revenue was slightly raised, suggesting confidence in its strategic direction.
According to TipRanks, Ader is a 4-star analyst with an average return of 5.7% and a 56.60% success rate. Ader covers the Technology sector, focusing on stocks such as Nutanix, NetApp, and Varonis Systems.
In another report released on July 29, Evercore ISI also maintained a Buy rating on the stock with a $28.00 price target.