Cloudflare (NET) Stock: Analyst Upgrade Sends Shares Higher on Growth Optimism

TLDR

• BTIG upgraded Cloudflare stock from Neutral to Buy with a $199 price target, sending shares up 2.2%
• Field checks with five partners representing over $100M in annual sales showed strong momentum across multiple business segments
• Analyst believes Cloudflare can maintain high 20s revenue growth through 2028
• Stock has dropped 33% since November 2025 but analyst sees the pullback as a compelling entry point
• Fourth quarter earnings scheduled for February 10, 2026

Cloudflare stock jumped 2.2% Wednesday after receiving an upgrade from BTIG analyst Gray Powell. The analyst raised his rating from Neutral to Buy and set a price target of $199.

Cloudflare, Inc., NET

Powell’s upgrade followed extensive research with Cloudflare partners. He spoke with five partners who collectively handle over $100 million in annual Cloudflare sales. The feedback was uniformly positive across the company’s business lines.

The analyst highlighted three key growth areas for the cloud services provider. Web application protection remains a core strength that markets may be undervaluing. Zero Trust and SASE segments are seeing rapid share gains. Developer services have built clear momentum throughout 2025 and into 2026.

Growth Trajectory Remains Strong

Powell projects Cloudflare can sustain revenue growth in the high 20s through 2028. This forecast comes from detailed product-level analysis. The analyst expressed confidence in the company’s upcoming earnings report.

Cloudflare will report fourth quarter results on February 10, 2026. The timing of the upgrade suggests BTIG expects solid numbers.

The stock has faced headwinds in recent months. Shares have fallen 33% since early November 2025. This decline exceeded both the broader software sector’s 26% drop and BTIG’s security coverage universe’s 22% decline.

Valuation Debate Continues

The company trades at 18.8x CY27E EV/sales. High-growth peers trade at 9.1x by comparison. The valuation gap is substantial.

The analyst sees potential AI-related tailwinds for Cloudflare. This contrasts with broader market worries about AI’s impact on software business models. Many investors fear AI could disrupt traditional software economics.

Powell’s channel checks revealed consistent strength across Cloudflare’s portfolio. Partners reported strong demand for core products. The Zero Trust and SASE categories showed particular strength.

Web application protection continues to drive the business. The analyst believes this market opportunity gets insufficient credit. Growth in this segment appears sustainable based on partner feedback.

Developer services represent an emerging growth driver. Momentum in this area has accelerated over recent quarters. Partners indicated increasing customer interest in these offerings.

The upgrade comes as software stocks face pressure from multiple angles. Valuation concerns and AI disruption fears have weighed on the sector. Cloudflare has not been immune to these trends.

The 33% decline since November created the opening Powell needed to upgrade. At current levels, the risk-reward profile looks more attractive. The $199 price target implies roughly 25% upside from pre-upgrade levels.

Partner conversations spanning over $100 million in sales provided conviction for the call. This sample size offers meaningful insight into Cloudflare’s business trajectory. The consistency of positive feedback across multiple partners strengthened the case.

BTIG’s upgrade reflects confidence in Cloudflare’s competitive position. The analyst sees the company taking share in key markets. Product momentum appears to be building rather than fading.

The February 10 earnings report will provide the next major catalyst. Investors will look for confirmation of the trends Powell identified in his research.

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