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Cloudflare's shares are experiencing a significant surge today.
Cloudflare's shares are experiencing a significant surge today.

Cloudflare's share value is climbing steadily today.

Cybersecurity titan, Cloudflare (NET 2.04%), saw a surge in shares on Friday, skyrocketing 3.9% by 12:30 PM ET. The stock reached as high as 5.4% earlier in the day. This uptrend aligns with the S&P 500 (^GSPC 1.00%) and Nasdaq Composite (^IXIC 1.51%) climbing 1% and 1.7%, respectively.

The epic leap can be attributed to an analyst's optimistic stance towards Cloudflare. Citigroup's Fatima Boolani upgraded the company from 'Neutral' to 'Buy,' while increasing her price target from $95 to a whopping $145. This transformation represents a potential increase of approximately 20.8% from its existing level.

Soaring upwards

In her research expose, Boolani presented her updated stance, stating Cloudflare primed itself for substantial revenue growth. She emphasized that the company's past 'productivity pains' would not be replicated in 2025. Citigroup resolutely believes in Cloudflare's ability to deliver a staggering 27% to 30% revenue expansion in the foreseeable future. Despite the stock’s current hefty forward price-to-earnings ratio (P/E) of 134, Cloudflare must consistently deliver this kind of growth to maintain its momentum, or risk a plunge.

Inflation victor

The latest Consumer Price Index (CPI) data released on Wednesday may have served as an additional boost, further propelling Cloudflare's shares higher. Cloudflare, as a growth stock, is sensitive to changes in interest rates. The lower-than-expected results might equate to more, or larger, rate cuts from the Federal Reserve in the following year -- a promising sign for Cloudflare.

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After Citigroup's Fatima Boolani upgraded Cloudflare from 'Neutral' to 'Buy' and raised her price target, the company's finance prospects looked promising. This investing opportunity, coupled with the optimistic outlook for substantial revenue growth and potential expansion, could attract more money into Cloudflare shares.

The lower-than-expected CPI data might have also influenced investing decisions, as the expected Federal Reserve rate cuts could benefit growth stocks like Cloudflare due to their sensitivity to interest rates.

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