Cloudflare soared Monday on an brokerage's upgrade to overweight ahead of its third-quarter earnings report on Nov. 3. The analyst expects strong results for Cloudflare stock.
Wells Fargo's Andrew Nowinski also sees the software maker turning free cash flow positive by the end of 2022.
"Cloudflare has delivered over 50% year-over-year revenue growth for the last eight consecutive quarters," Nowinski said in a note to clients. Nowinski has a price target of 65 on Cloudflare stock.
He added "Given the uptick in results in our reseller survey, we believe Q3 revenue growth will also be above 50%. Management also noted on the last earnings call that they expect positive free cash flow in the back half of 2022. We believe this metric should not be overlooked, as the company should be able to maintain positive free cash flow in 2023."
Shares in San Francisco-based Cloudflare jumped 13.2% to close at 51.72 on the stock market today. The Nasdaq composite and software stocks generally rallied as well.
Cloudflare Stock: No Profit Expected
In the September quarter, NET stock analysts expect Cloudflare to report a zero profit, the same as a year earlier. They see revenue at $250.6 million, up 46%.
Started in 2009, Cloudflare speeds up and provides security for web applications routed through its intelligent global network. In addition, the company competes in both corporate and consumer markets.
As of Friday's market close, NET stock had been down 64% in 2022.
Cloudflare stock holds a Relative Strength Rating of only 16 out of a best-possible 99, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
