Scotiabank initiated coverage of Cloudflare with a Sector Perform rating and $85 price target. Cloudflare is “undoubtedly among the ‘GOAT’ companies of the cloud generation” as a “powerhouse” in content delivery and application security, says the analyst, who adds that the firm likes how the company is adding SASE and edge compute capabilities to its repertoire. However, Scotia’s fieldwork suggests Cloudflare is not yet a strategic partner in the enterprise and that investors expect a beat-and-raise cycle to consensus revenue growth expectations in 2024, which, based on its bottom-up build, the firm “cannot confidently underpin.”
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