Investing.com– Stifel upgraded its rating on Cloudflare Inc (NYSE:NET) and raised its target price citing increased confidence in the network firm’s technology development and earnings prospects.
Stifel raised Cloudflare to Buy from Hold, while raising its target price to $136.0 from $95.0. The new target represents a nearly 19% increase from Cloudflare’s Monday close.
Stifel said Cloudflare is a “best-in-class asset,” and that the high price of its shares was justified by the firm’s “quality.”
“Self-help dynamics, and solid technology levered to many secular trends, can help Cloudflare deliver financial/stock outperformance,” Stifel analysts wrote in a note. The brokerage said it had “increasing confidence” that Cloudflare can sustain at least 25% to 30% year-on-year top-line growth, along with improved profitability.
Stifel lauded Cloudflare’s far-reaching network, which facilitates about 20% of the internet, and stated that the company will be able to further leverage this coverage for earnings growth.
The brokerage also sees early signs that the company is benefiting from demand for artificial intelligence, especially given that it offers a low-latency network that could see increased momentum from AI demand.
Stifel said a growing global dependence on the internet was likely to keep demand for Clouflare’s services upbeat. The company is one of the largest content delivery network services provider in the world, and runs a large portion of the internet.