Positive Outlook for Confluent: Strong Q1, Growth in Data Streaming and Generative AI, and Strategic Innovations Drive Buy Rating

TD Cowen analyst Derrick Wood has reiterated their bullish stance on CFLT stock, giving a Buy rating yesterday.

Derrick Wood has given his Buy rating due to a combination of factors that suggest a positive outlook for Confluent’s stock. The company is expected to report a strong first quarter, with continued progress in its Data Streaming Platform (DSP) and Flink offerings. Despite some exposure to the US Federal market, Confluent’s consumption-based model is seen as more resilient compared to seat-based models, especially as it strengthens its position in the Generative AI space, where spending is anticipated to be more stable.
Derrick Wood also highlights Confluent’s recent performance, including a notable 24% growth in subscription revenue, which exceeded market expectations. The company’s strategic initiatives, such as its shift towards a multi-product platform and innovations in stream processing, are driving increased adoption and customer interest. Additionally, the excitement around new products like Tableflow and the continued traction of the Confluent Platform suggest potential catalysts for future growth. These factors, combined with the stock’s current valuation and potential for a relief rally, underpin Wood’s Buy rating.

In another report released yesterday, Capital One Financial also maintained a Buy rating on the stock with a $32.00 price target.