Wall Street analysts’ outlook for Cloudflare Inc. (NET)

Cloudflare Inc. (NYSE: NET) stock jumped 4.43% on Monday to $47.62 against a previous-day closing price of $45.60. With 4.36 million shares changed hands, the volume of the stock remained lighter than its average volume of 5.18 million shares. During the session, the Software – Infrastructure company that operates in wider Technology sector, reached to the highest price of $47.98 whereas the lowest price it dropped to was $45.41. The 52-week range on NET shows that it touched its highest point at $132.45 and its lowest point at $37.37 during that stretch. It currently has a 1-year price target of $62.58. Beta for the stock currently stands at 1.02.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of NET was up-trending over the past week, with a rise of 8.40%, but this was up by 2.39% over a month. Three-month performance dropped to -11.21% while six-month performance fell -7.80%. The stock lost -49.02% in the past year, while it has gained 5.33% so far this year. A look at the trailing 12-month EPS for NET yields -0.70 with Next year EPS estimates of 0.15. For the next quarter, that number is 0.04. This implies an EPS growth rate of -109.30% for this year and 31.25% for next year.

Float and Shares Shorts:

At present, 326.59 million NET shares are outstanding with a float of 282.09 million shares on hand for trading. On Oct 13, 2022, short shares totaled 12.36 million, which was 3.77% higher than short shares on Sep 14, 2022. In addition to Mr. Matthew Prince as the firm’s Co-Founder, Chairman & CEO, Ms. Michelle Zatlyn serves as its Co-Founder, COO, Pres & Director.

Institutional Ownership:

Through their ownership of 87.24% of NET’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 50.65% of NET, in contrast to 32.21% held by mutual funds. Shares owned by individuals account for 11.84%. As the largest shareholder in NET with 11.06% of the stake, Morgan Stanley Investment Managem holds 31,495,868 shares worth 31,495,868. A second-largest stockholder of NET, Baillie Gifford & Co., holds 26,335,438 shares, controlling over 9.25% of the firm’s shares. The Vanguard Group, Inc. is the third largest shareholder in NET, holding 24,710,438 shares or 8.68% stake. With a 3.53% stake in NET, the American Funds Growth Fund of Ame is the largest stakeholder. A total of 10,048,713 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.89% of NET stock, is the second-largest Mutual Fund holder. It holds 8,219,486 shares valued at 371.6 million. Morgan Stanley Instl. Fund-Growth holds 2.38% of the stake in NET, owning 6,779,768 shares worth 306.51 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for NET since 29 analysts follow the stock currently. There are 13 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 14 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With NET analysts setting a high price target of $150.00 and a low target of $36.00, the average target price over the next 12 months is $64.77. Based on these targets, NET could surge 214.99% to reach the target high and fall by -24.4% to reach the target low. Reaching the average price target will result in a growth of 36.01% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. NET will report FY 2022 earnings on 02/08/2024. Analysts have provided yearly estimates in a range of $0.12 being high and $0.10 being low. For NET, this leads to a yearly average estimate of $0.11. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Cloudflare Inc. surprised analysts by $0.06 when it reported $0.06 EPS against a consensus estimate of $0.00. The surprise factor in the prior quarter was $0.01. Based on analyst estimates, the high estimate for the next quarter is $0.05 and the low estimate is $0.04. The average estimate for the next quarter is thus $0.04.

Summary of Insider Activity:

Insiders traded NET stock several times over the past three months with 2 Buys and 4 Sells. In these transactions, 59,000 shares were bought while 65,655 shares were sold. The number of buy transactions has increased to 27 while that of sell transactions has risen to 120 over the past year. The total number of shares bought during that period was 449,057 while 406,356 shares were sold.

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