Citi upgrades Cloudflare to Buy on conviction in revenue growth

Citi analyst Fatima Boolani upgraded Cloudflare (NET) to Buy from Neutral with a price target of $145, up from $95. While there is “clearly ample optimism already embedded in the stock,” Citi has higher conviction on Cloudflare’s ability to sustainably deliver 27%-30% annual revenue growth, the analyst tells investors in a research note. The firm also sees a “more visible believable path” to $5B in revenue. The company has a “much-deeper bench” and is “primed to surgically tackle the enterprise,” contends Citi. It believes Cloudflare’s go-to-market “productivity pains” in fiscal 2023, followed by stability in 2024, will drive growth “reinvigoration” in 2025.