Wells Fargo Believes Confluent Has Room For Meaningful Upside Given Vast Event-Streaming Opportunity

Wells Fargo Believes Confluent Has Room For Meaningful Upside Given Vast Event-Streaming Opportunity
  • Wells Fargo analyst Michael Turrin reiterated an Overweight and $40 price target on Confluent, Inc CFLT.
  • He hosted investor meetings with Confluent management and became more optimistic about the company's positioning in the current environment. 
  • Despite fears of a nearer-term slowdown from CFLT's consumption-based model, the management stressed the difference between operational and analytical workloads, pointing to (1) the mission-critical nature of data streaming within end-user tech stacks, (2) ongoing bookings success over the last few quarters, and (3) that not all consumption models are the same. 
  • He senses that CFLT can continue to execute through the noise, only seeing minimal impacts from the broader backdrop. 
  • The analyst reports no change to his positive thesis and sees a vast event-streaming opportunity ahead, and thinks recent investments can help fuel a rapid adoption cycle and long 'stream' of excessive growth for CFLT. 
  • He derived the price target using a higher valuation than other companies in software. 
  • Still, with room for meaningful upside, given the vast, open-ended nature of the event-streaming opportunity, unique competitive positioning, and Confluent's differentiated tech platform, he thinks it presents significant product-led optionality. 
  • Price Action: CFLT shares traded lower by 1.30% at $26.88 on the last check Tuesday.

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