Cloudflare Nets $160 Target After $130M Deal Spikes Shares

Needham analyst Mike Cikos on Friday reiterated a Buy rating on the shares of Cloudflare Inc NET and raised the price forecast from $145 to $160.

According to the analyst, Cloudflare posted strong quarterly results and eased investor concerns about its 2025 outlook, which boosted its stock.

The company secured a record-breaking $130 million, five-year Pool-of-Funds agreement, beating out AWS, designed to save the client over $100 million.

Executives believe such deals are replicable, especially among Fortune 500 firms. Sales productivity also improved by double digits year over year, and ramped sales reps are expected to gain momentum through 2025, said the analyst.

Cloudflare’s recent major wins, highlighted by a $130 million Pool-of-Funds deal and its longest-term SASE contract showcase growing momentum with large enterprise clients.

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Cloudflare demonstrated strong go-to-market performance with a sixth consecutive quarter of double-digit year-over-year sales productivity growth, exceeding pipeline targets and shortening sales cycles.

Despite expecting longer cycles due to larger enterprise engagements, the company achieved quicker cycles, reflecting its effective processes and leadership.

The company maintained its CY25 guidance for revenue, operating profit, and EPS, despite stronger-than-expected first-quarter results.

The steady outlook reflects management’s cautious approach due to an uncertain environment, rather than changes in customer behavior. This conservative stance is expected to lead to more upside, especially in the second half of the year, .

Cloudflare is shifting its business model from network investment and a freemium approach to focusing on deeper service functionality and targeting large enterprise adoption.

The analyst concluded that its technology is well-suited to address critical problems. It also supports emerging trends like Cloud Direct, Zero Trust, digital transformation, multi-cloud, and Edge Compute.

Price Action: NET shares traded higher by 6.58% at $132.76 at last check Friday.

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