3. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 53
Cloudflare, Inc. (NYSE:NET) is an internet infrastructure company that provides services to businesses and consumers. The company’s services include content delivery, security, and performance optimization for websites, mobile applications, and network services. The company’s products and services are designed to secure and protect customers’ websites, applications, and APIs from malicious activities, such as DDoS attacks, data breaches, and malicious botnets. Cloudflare, Inc. (NYSE:NET) is placed third on our list of the best cybersecurity stocks to buy now.
Analysts are bullish on Cloudflare, Inc. (NYSE:NET). This November, Cantor Fitzgerald analyst Jonathan Ruykhaver raised his price target on Cloudflare, Inc. (NYSE:NET) to $65 from $55 and reiterated a Neutral rating on the shares. On November 28, JPMorgan analyst Mark Murphy took coverage of Cloudflare, Inc. (NYSE:NET) and upgraded the stock to Neutral from Underweight with a $42 price target.
At the end of Q3 2022, 53 hedge funds disclosed ownership of stakes in Cloudflare, Inc. (NYSE:NET). The total value of these stakes amounted to $629 million, up from $541 million in the previous quarter with 41 positions. The hedge fund sentiment for the stock is positive. As of September 30, Two Sigma Advisors is the top investor in the company and has a position worth $85.5 million.
Here is what Baron Funds had to say about Cloudflare, Inc. (NYSE:NET) in its third-quarter 2022 investor letter:
“We continued to build our position in Cloudflare, Inc. (NYSE:NET) during the quarter as the shares declined with the overall software space and the long-term risk/ reward balance became more compelling. The company reported a strong second quarter, with revenue growth accelerating to 54%, as well as better gross and operating margins. Third quarter guidance was also ahead of Wall Street expectations. Given Cloudflare’s proprietary network and massive global scale, its software products have a disruptive price-performance advantage over competitors. As the company introduces new products as well as disruptive packaging/pricing, its unit level economics should continue to improve over time, with the company already well ahead of its long-term gross margin target of 74%, reporting 78.9% for the second quarter. This drives strong cross/upselling activity with customers, reflected in strong net-dollar expansion rates in excess of 125%. Indeed, in the most recent quarters, customers purchasing five or more products reached 81% of the base, six or more products reached 70% of the base, and seven or more products reached 58% of the base. Enterprise penetration continues to be a key long-term driver, with 1,749 customers now spending over $100,000 annually with the company, growing 61% and now accounting for over 60% of total revenue. With approximately 152,000 paying customers at the end of last quarter, large enterprise customers still represent just 1% of total paid customers and thus a material growth opportunity in the coming years. We continue to have high confidence in the company’s ability to innovate at a rapid pace (announced 20 new products or enhancements in September alone), package and bundle with disruptive pricing, and take material share in its large and growing addressable markets.”
