Citigroup Maintains Buy Rating on Cloudflare, Raises PT to $255 from $240.

Citigroup Maintains Buy Rating on Cloudflare, Raises PT to $255 from $240.

Citigroup analysts have maintained their Buy rating on Cloudflare, Inc. (NYSE:NET), but have increased their price target to $255 from the previous $240. This update reflects the analysts' positive outlook on the company's recent strategic initiatives and strong financial performance.

Cloudflare, a leading cloud security and performance company, recently introduced Externa and Interna packages to simplify the adoption of its extensive product portfolio. These packages, structured into three tiers, aim to enhance customer engagement, promote cost predictability, and contribute to the company's financial growth. According to Fatima Boolani, a Citi analyst, the new packages align with Cloudflare's strategy to drive revenue growth and improve customer satisfaction [1].

In the second quarter of 2025, Cloudflare reported a 27.8% year-over-year growth in revenue, driven by accelerating enterprise demand and notable expansion within its largest customer segments. However, the market responded negatively, likely reflecting persistent operating margin concerns. Despite this, the company's CEO, Matthew Prince, emphasized the success of its "pool of funds" deals and a 22% year-over-year increase in customers spending more than $100,000 annually, which now contribute over 70% of revenue [2].

Looking ahead, Cloudflare will continue to focus on its AI-driven web interfaces and content payment initiatives, as well as large, consumption-based enterprise contracts. The company's ability to balance sales capacity investments with margin discipline will be critical in the upcoming quarters.

Institutional investors have also shown strong interest in Cloudflare. Wealthedge Investment Advisors LLC lifted its position in shares of Cloudflare by 64.5% during the first quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). Other institutional investors, such as GAMMA Investing LLC, Crossmark Global Holdings Inc., Amalgamated Bank, Wellington Management Group LLP, and Yousif Capital Management LLC, have also increased their holdings in Cloudflare [2].

The recent insider sales, including Douglas James Kramer selling 3,000 shares and CFO Thomas J. Seifert selling 59,130 shares, have decreased their ownership by 1.87% and 19.67% respectively. However, these sales do not indicate a significant change in the company's overall financial health or strategic direction [2].

Cloudflare's stock performance has been mixed, with a 1-year low of $74.88 and a 1-year high of $219.00. The company's stock has a market cap of $68.02 billion, a price-to-earnings ratio of -574.07, and a beta of 1.84. Research analysts anticipate that Cloudflare, Inc. will post -0.11 EPS for the current fiscal year [2].

In conclusion, Citigroup's positive rating and increased price target reflect the analysts' confidence in Cloudflare's strategic initiatives and strong financial performance. However, the company will need to continue balancing growth and margin discipline to meet investor expectations.

References:
[1] Cloudflare. (n.d.). Externa and Interna Packages. Retrieved from https://www.cloudflare.com/plans/enterprise/interna/
[2] Yahoo Finance. (2025, July 2). 5 Revealing Analyst Questions Cloudflare. Retrieved from https://finance.yahoo.com/news/5-revealing-analyst-questions-cloudflare-025053206.html