Needham reiterated its Buy rating on Cloudflare (NYSE:NET) and raised its price target to $160 from $110 ahead of the company's fourth-quarter earnings release on Thursday.
Shares of the cloud security provider declined about 3% on Monday, as broader tech stocks faced pressure following tariff-related news. Meanwhile, Baird downgraded Cloudflare to Neutral from Outperform but increased its price target to $140 from $125, as part of a broader downgrade of three security and infrastructure software stocks.
Analyst Insights on Cloudflare's Growth Needham analysts, led by Mike Cikos, noted expectations for stronger sales productivity from Cloudflare's restructured go-to-market strategy. While the company has reported double-digit improvements in sales efficiency in recent quarters, total headcount growth (18% year-over-year in Q3 2024) has outpaced the 11% growth in sales and marketing personnel.
The analysts also highlighted Cloudflare's shift toward enterprise sales, with 70% of new sales hires in 2024 focused on enterprise clientsup from a 40% average in the past two years. Cikos and his team believe that continued productivity gains and increased sales capacity in 2025 will serve as catalysts for further growth, prompting the price target revision.
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