Buy Cloudflare Or Sell? Analysts Vary Over Sales Acceleration And Business Momentum

Buy Cloudflare Or Sell? Analysts Vary Over Sales Acceleration And Business Momentum

Cloudflare Surpasses Q4 Expectations, Analysts Adjust Price Targets

Cloudflare, Inc. (NYSE: NET) delivered a strong fourth-quarter earnings report, surpassing Wall Street estimates and prompting multiple analysts to adjust their price targets for the stock.

Earnings Beat and Future Outlook

Cloudflare reported adjusted earnings per share (EPS) of $0.19, exceeding analysts' expectations of $0.18. The company's quarterly revenue reached $459.9 million, marking a 27% year-over-year increase from $362.47 million and surpassing the consensus estimate of $452.09 million.

For the first quarter of 2025, Cloudflare projects adjusted EPS of $0.16 and revenue between $468 million and $469 million.

Analyst Reactions and Price Target Adjustments

Following the earnings release, multiple Wall Street analysts revised their outlook on Cloudflare:

• JMP Securities: Analyst Trevor Walsh maintained a "Market Outperform" rating and increased the price target from $135 to $180, citing Cloudflare’s strong AI-driven growth opportunities.
• Guggenheim: Analyst John Difucci reiterated a "Sell" rating but raised the price target from $57 to $68.
• Needham: Analyst Mike Cikos maintained a "Buy" rating and increased the price target from $160 to $185.

Cloudflare’s AI Expansion and Competitive Strength

Cloudflare’s CEO, Matthew Prince, highlighted four key areas where the company is leveraging artificial intelligence (AI):

1. Internal Efficiency – Using AI to optimize internal operations.
2. Enhanced Security & Performance – Making its cybersecurity products smarter.
3. AI-Driven Development – Expanding Cloudflare Workers as a tool for AI inference and automation.
4. Bridging AI and Content Providers – Positioning itself as a key intermediary between AI platforms and content creators.

JMP’s Walsh noted that Cloudflare stands out as one of the most diversified AI-driven companies in the cybersecurity space. Its adaptability and cloud-agnostic approach also make it less vulnerable to AI industry disruptions, such as the recent launch of DeepSeek R1.

Cautious Outlook Despite Strong Q4 Performance

While Guggenheim’s Difucci acknowledged Cloudflare’s strong leadership and solid Q4 results, he pointed out that new annual recurring revenue (ARR) growth slowed and that the company's first-quarter guidance fell short of market expectations. Additionally, while Cloudflare’s 2025 revenue forecast slightly exceeded analyst estimates, its projected operating profit and EPS were lower than anticipated.

Despite mixed analyst sentiment, Cloudflare’s strong AI positioning and consistent revenue growth continue to make it a key player in the cybersecurity and cloud computing sectors.