Robert W. Baird analyst Shrenik Kothari has maintained their neutral stance on NET stock, giving a Hold rating today.
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Shrenik Kothari has given his Hold rating due to a combination of factors influencing Cloudflare’s current market position. Despite being optimistic about Cloudflare’s long-term potential as a strategic edge-AI platform, there is a cautious stance in the short term due to high market expectations and a significant recent increase in stock value. The company has experienced a historic quarter with large deals and positive trends in AI-driven Workers traction, but there are concerns about the variability in usage models and the digestion risk related to SASE/Zero-trust deals.
Cloudflare is facing mixed comparisons in the second quarter, with high expectations following a substantial stock price increase of nearly 80% over three months. While the company has delivered above-plan performance in some areas, there are temporary challenges in SASE against established competitors. The stock’s valuation is at the high end among its peers, and although Cloudflare’s innovative contracts and expanding AI use cases are promising, the elevated sentiment suggests that even strong execution might not suffice to justify further immediate gains, warranting a Hold rating.
In another report released today, Jefferies also maintained a Hold rating on the stock with a $200.00 price target.