Cloudflare Inc. (NET): Here Are Some Research Recommendations

Cloudflare Inc. (NYSE:NET) finished Wednesday with an addition of $8.49 to close at $159.43, an upside of 5.62 percent. An average of 4,465,240 shares of common stock have been traded in the last five days. There was a gain of $25.99 in the past week. The last 20 days have seen an average of 4,306,130 shares traded, while the 50-day average volume stands at 3,516,822.

NET stock has increased by 25.77% in the last month. The company shares reached their 1-month lowest point of $108.93 on 10/01/21. With the stock rallying to its 52-week high on 10/13/21, shares of the company touched a low of $50.54 and a high of $151.47 in 52 weeks. In spite of this, the price is up 5.26% from the 52-week high.

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Insider Transactions

2 days have passed since Cloudflare Inc. (NET) last reported insider trading activity. SEIFERT THOMAS J, who is Chief Financial Officer, most recently acquired $20,000 shares at $148.42 per share on Oct 12. In this transaction, the insider spent $2,968,376. Director, Ledbetter Carl, disposed of 50,000 shares at a price of $137.01 on Oct 08. The insider now owns more than $6,850,411 worth of shares. Prior to that, General Counsel Kramer Douglas James went on to Sale 40,000 shares at $112.17 each on Oct 01. An amount of $4,486,622 was transacted.

Valuation Metrics

Cloudflare Inc. (NET) has a trailing price-to-earnings (P/E) ratio of 29.20 for the broader industry and 37.24 for the sector. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 92.03, the price-to-book (PB) ratio at 61.32.

The quick ratio of Cloudflare Inc. for the three months ended June 29 was 5.70, and the current ratio was 5.70, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.50 and a total debt to equity ratio of 0.00 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 76.80% against a 5-year average of 76.5%. Cloudflare Inc.’s EBITDA margin for the year ending June 29 is -9.59%, while its operating margin for the same period stands at -20.00%. Its gross profit as reported stood at $330.0 million compared to revenue of $431.06 million.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Cloudflare Inc.’s return on assets was -9.70%. For the broader industry, ROE averaged 3.34 over the past year.

Earnings Surprise

For the three-month period that ended June 29, Cloudflare Inc. had $785.99 million in cash. In the quarter under review, the net income was up than the previous quarter. The company posted a net income of $152.43 million in the quarter, while revenues of $138.06 million were grew 34.58%. The analyst consensus anticipated Cloudflare Inc.’s latest quarter earnings to come in at -$0.03 per share, but it turned out to be -$0.02, a 33.30% surprise. For the quarter, EBITDA amounted to $3.19 million. Shareholders own equity worth $312.43 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Cloudflare Inc. (NET) price momentum. RSI 9-day as of the close on 13 October was 82.47%, suggesting the stock is Overbought, with historical volatility in this time frame at 16.78%.

As of today, NET’s price is $146.24 +19.48% or $25.99 from its 5-day moving average. NET is currently trading +24.02% higher than its 20-day SMA and +113.14% higher than its 100-day SMA. However, the stock’s current price level is +33.34% above the SMA50 and +105.72% above the SMA200.

The stochastic %K and %D were 98.26% and 98.19%, respectively, and the average true range (ATR) was 7.07. With the 14-day stochastic at 99.92% and the average true range at 6.57, the RSI (14) stands at 75.69%. The stock has reached 15.88 on the 9-day MACD Oscillator while the 14-day reading was at 22.10.

Analyst Ratings

Piper Sandler downgraded Cloudflare Inc. (NYSE: NET) to a a Neutral rating in its most recent analyst report. Previously, the stock was rated as a an Overweight.The consensus rating for Cloudflare Inc. (NET) among analysts is Overweight. According to current brokerage recommendations, 0 brokerage firms advise that investors sell NET, while 8 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 0 analysts, while 10 others rate it as a “buy”.

What is NET’s price target for the next 12 months?

Analysts predict a range of price targets between $91.00 and $150.00, with a median target of $130.00. Taking a look at these predictions, the average price target given by analysts for Cloudflare Inc. (NET) stock is $126.87.


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