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Cloudflare’s (NYSE:NET) stock rose about 2% premarket on Tuesday after UBS upgraded the shares to Neutral from Sell and raised the price target on the stock to $82 from $76.
The analysts noted that last year they initiated Cloudflare with a Sell rating, based on a view that despite the company’s large total addressable market, or TAM, disruptive research and development, or R&D, capabilities and network advantage, the premium multiple embedded too much near-term AI upside and did not properly consider go-to-market challenges.
Following some Global Traffic Manager, or GTM, momentum, better Secure Access Service Edge, or SASE checks, the first-quarter guide-down and a valuation de-rating, the analysts think that shares capture a more balanced risk/reward.
The analysts think growth headwinds (considering mid-20% revenue growth) are reflected, with shares down 12% since the first quarter.
Cloudflare (NET) has a Strong Buy rating at Seeking Alpha’s Quant Rating system, which consistently beats the market. The Seeking Alpha authors’ average rating is also positive with a Buy but the average Wall Street analysts’ rating is Hold.