Analyst Mike Cikos from Needham maintained a Buy rating on Cloudflare (NET – Research Report) and keeping the price target at $185.00.
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Mike Cikos has given his Buy rating due to a combination of factors that highlight Cloudflare’s strategic advantages. One of the key elements is the Pool of Funds license vehicle, which has significantly contributed to the company’s new annual contract value. This mechanism is seen as a strategic tool that fosters stronger customer relationships, making it easier for Cloudflare to upsell and cross-sell additional services over time. The increased commitment required under this model, despite elongating the sales cycle by approximately 20%, is believed to create a more stable and predictable revenue stream.
Additionally, Cloudflare’s positioning in the Secure Access Service Edge (SASE) market is a crucial factor. The data indicates a strong preference for Cloudflare’s solutions in the market, with a substantial portion of deployments being replacements of existing systems. This suggests a high level of customer satisfaction and trust in Cloudflare’s offerings, contributing to the positive outlook and resulting in the Buy rating.
In another report released on February 13, Argus Research also maintained a Buy rating on the stock with a $205.00 price target.