Cloudflare Pops 11% On Robust 3Q Sales; Stock Up 240% YTD

Shares of Cloudflare Inc. jumped 10.8% in extended trading after the cybersecurity company reported robust 3Q results and forecast 4Q sales and earnings above consensus estimates.

The company’s 3Q revenue of $114.2 million came ahead of the Street estimate of 103.2 million and soared 54% from the year-ago quarter. Cloudfare posted 3Q losses of $0.02 per share, better than analysts’ loss estimates of $0.05. Moreover, it compared favorably to the year-ago period’s loss of $0.16.

Cloudflare’s (NET) CEO Matthew Prince said “Our third quarter represented many significant milestones including surpassing $100M in revenue, crossing 100,000 paying customers, and releasing more than a dozen new products and features.”

As for 4Q, the company expects revenue in the range of $117.5 to $118.5 million, higher than analysts’ estimates of $112.2 million. Cloudflare also forecasts adjusted loss of $0.03 to $0.04 per share, compared with consensus loss estimate of $0.05. For 2020, the company expects its revenues in the range of $422.5 million to $423.5 million. It anticipates 2020 loss per share in the range of $0.12 to $0.13. (See NET stock analysis on TipRanks)

Ahead of the 3Q results, Oppenheimer analyst Shaul Eyal raised the price target to $65 (12.1% upside potential) from $55 and maintained a Buy rating on Cloudflare stock. The analyst said that “NET’s FY20 revenue guidance, at an implied 41% YoY growth, reflects a conservative stance, and we see potential upside to current consensus revenue estimate of $406.4M.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 7 Buys and 2 Holds. Given the year-to-date share price rally of about 240%, the average price target of $54.38 implies downside potential of about 6.2% to current levels.

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