Cloudflare stock (NASDAQ:NET) rose substantially on Monday, as much as 15.7%. By 3:33 p.m. The stock was still up 13.3%.
An overall increase in the broader market undoubtedly aided its advance, but the cloud computing business also received an upgrade and some positive remarks from a Wall Street analyst.
What Happened to Cloudflare Stock
Wells Fargo analyst Andrew Nowinski raised Cloudflare to overweight (buy) from equal weight (hold) while raising his price objective to $65, up from $62.
The analyst highlighted that cloudflare stock (NASDAQ:NET) has fallen dramatically this year, brought down by the overall market drop, and that he feels the sell-off has been excessive. Indeed, as of Friday’s market closing, the stock was down 65% this year, almost double the decrease of the Nasdaq Composite, which was down 34% over the same time. According to Nowinski, the stock’s decline has resulted in a “better entry opportunity.”
According to the analyst, Cloudflare stock (NASDAQ:NET) will also benefit as business clients seek to combine their accounts with fewer providers in an attempt to minimize costs and complexity. Finally, the firm is forecast to create positive free cash flow in the second part of this year, which is a significant step toward profitability.
So, What Next for Cloudflare Stock?
The analyst is most likely correct. Cloudflare CEO Matthew Prince spoke at length about the importance of positive free cash flow in its second-quarter earnings call, noting that its margin “demonstrated a considerable improvement from quarter to quarter, and we continue to predict that the second half of the year will see growth,” and that in “this uncertain time,” Cloudflare is “prioritizing being free-cash-flow positive.”
Revenue increased 54% year over year, which Prince attributed to the company’s growing foothold in the business sector.
Cloudflare stock (NASDAQ:NET) is now trading at 13 times the expected earnings for the next year, so it is not for everyone. Cloudflare, however, is a good option for those willing to pay a premium for quality.
Featured Image – Megapixl © Viewimage
Author Okoro Chinedu 
