It’s time to buy the dip in Cloudflare (NET).

After plummeting from about $180 to a low of $111, the stock caught strong support and is just starting to pivot higher. It’s also starting to pivot from over-extensions on RSI, MACD and Williams’ %R. Last trading at $127.50, we’d like to see NET retest $140 initially. Helping, the stock was double upgraded by Bank of America with a buy rating, and a price target of $160. 

“The analysts think Cloudflare is set to be one of the true “AI winners” in software. The company stands out by offering customers an alternative to building their own capacity — an expensive and inefficient task. Cloudflare is gaining momentum in network security, mainly Secure Access Service Edge, or SASE, which should accelerate as firewall refresh cycles near and enterprises look to modernize with software-based security solutions,” added Seeking Alpha.

Needham analysts also reiterated a buy rating with a price target of $185. Morgan Stanley reiterated an overweight rating on NET with a price target of $154. And JMP Securities reiterated a market outperform rating with a price target of $180.

Plus, recent earnings weren’t too shabby.

EPS of 19 cents beat by a penny. Revenue of $459.9 million, up 26.9% year over year, beat by $7.78 million. “We had a very strong end of 2024. We saw record growth in our largest customers, those that spend more than $1 million with Cloudflare per year—closing the year with 173. We added 55 of those customers in 2024, and more than half of these new additions came in during fourth quarter alone,” said Matthew Prince, co-founder & CEO of Cloudflare. 

“We drove the record results in the fourth quarter while ensuring we’re well-positioned to capture the demand we see lined up in 2025 to reaccelerate Cloudflare’s growth. ”In addition, the company guided Q1 2025 revenue to range between $468 million and $469 million, reflecting a 24% year-over-year increase. For the full year, revenue is expected to be between $2.09 billion and $2.094 billion, representing 25% growth.

Sincerely,

Ian Cooper