$NET Stock Sees Significant Upgrade as Goldman Sachs Analyst Doubles Price Target
Shares of Cloudflare ($NET) surged by over 5% in trading on Thursday after Goldman Sachs analyst Gabriela Borges upgraded the stock to a Buy with an almost doubled price target of $140 from $77. This represents a significant upside potential of 22.3% from current levels.
Borges’ Rationale Behind the Upgrade
According to Borges, her change in stance stems from Cloudflare’s improved performance and strategic initiatives. The analyst previously held a bearish view due to concerns about post-COVID normalization, lackluster revenue growth, and slower advancements in network security and enterprise markets. However, with the company’s positive free cash flow and its ability to outperform the S&P 500 index, Borges has revised her perspective on the stock’s trajectory.
Key Catalysts for $NET Stock
Borges identified several key catalysts expected to drive Cloudflare’s growth:
Improved Sales and Marketing Efficiency
The analyst expects improved sales and marketing efficiency to be a critical factor in driving growth. With customer acquisition costs anticipated to decrease significantly, Borges projects a 10% reduction in costs by 2025 and 2026, which could boost revenue by 4% and 7%, respectively.
Monetization Potential of Act III Products
Borges also highlighted the monetization potential of Cloudflare’s Act III products, which focus on developer services, as a crucial avenue for sustained growth.
Is $NET Stock a Good Buy?
Analysts remain cautiously optimistic about $NET stock, with a Moderate Buy consensus rating based on nine Buys, eight Holds, and three Sells. While the average NET price target of $104.26 implies a downside potential of 9.1% from current levels, Borges’ upgraded view suggests that $NET could be a compelling buy opportunity.
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