Koji Ikeda, an analyst from Bank of America Securities, maintained the Sell rating on Confluent (CFLT – Research Report). The associated price target was lowered to $25.00.
Koji Ikeda’s rating is based on a combination of factors, primarily focusing on the valuation and growth prospects of Confluent. The stock is rated as Sell due to its current valuation metrics, which are considered less favorable compared to its peers in the infrastructure software sector. The enterprise value to revenue growth multiple for Confluent is notably lower than that of its peers, which suggests that the market may not be fully confident in its growth trajectory.
Additionally, while the recent promotion of Ryan Mac Ben to Chief Revenue Officer is seen as a logical move, it introduces potential execution risks associated with leadership transitions. Confluent’s revenue growth and free cash flow margins are projected to be below the average of its peers, further supporting the Sell rating. The adjustments in growth forecasts and price objectives, influenced by currency assumptions and market conditions, also play a role in the cautious outlook for the stock.
Based on the recent corporate insider activity of 96 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CFLT in relation to earlier this year.