Cloudflare in focus as JP Morgan upgrades after recent pullback
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Key points:
- Cloudflare was in focus on Tuesday as J.P. Morgan upgraded shares of the connectivity company to Overweight from Neutral after the recent 20% decline.
- Shares rose 3.3% in premarket trading.
- “We are upgrading shares of NET following the -20% pullback over the past month as we anticipate the modestly lower valuation premium, while still high, will offer an attractive entry into the shares, particularly with the company remaining well positioned to benefit from the scaling of Act I and Act II with existing customers, as well as an acceleration in the pace of wins for Workers with strong traction from developers,” analyst Samik Chatterjee wrote in a note to clients. “Customer momentum, combined with strong growth with large customers, and the transformation of the go-to-market sales organization, positions the company for more headroom for growth with Enterprises; we see the opportunity for the company to accelerate revenue growth in the medium-term to 35%+, which, in conjunction with improving free cash flow margins will enable the shares to grow into the premium valuation multiple.”
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