TLDR
- Cloudflare shares rose 2.2% after BTIG upgraded the stock to Buy with a $199 price target
- Partner checks covering $100M+ in sales revealed strong momentum across product lines
- Analyst projects high 20s revenue growth through 2028 based on product analysis
- Stock down 33% since November creates attractive entry point according to BTIG
- Q4 earnings report scheduled for February 10, 2026
Cloudflare received a vote of confidence Wednesday as BTIG analyst Gray Powell upgraded the cloud services provider to Buy from Neutral. The move sent shares up 2.2%.
Powell set a $199 price target on the stock. His upgrade followed extensive field research with company partners.
The analyst conducted conversations with five partners representing over $100 million in combined annual Cloudflare sales. The feedback painted a consistently positive picture across multiple business segments.
Powell identified three key areas driving growth. The company’s web application protection market shows underappreciated long-term potential. Zero Trust and SASE segments are experiencing rapid share gains. Developer services have built momentum throughout 2025 and into 2026.
Revenue Growth Projections
The analyst believes Cloudflare can maintain revenue growth in the high 20s through 2028. This projection stems from detailed product-level analysis.
Powell expressed confidence ahead of the company’s fourth quarter earnings. Cloudflare will report results on February 10, 2026.
Recent stock performance has been challenging. Shares have dropped 33% since early November 2025. This underperformed the broader software sector’s 26% decline and BTIG’s security coverage universe’s 22% drop.
Valuation Questions Remain
Cloudflare trades at 18.8x CY27E EV/sales. High-growth peers trade at 9.1x for comparison.
Powell recognizes valuation concerns persist. Despite the premium multiple, he views the recent selloff as creating opportunity. He described it as “a compelling entry point into the top growth story” in BTIG’s coverage.
The analyst sees potential AI-related benefits for Cloudflare. This counters broader market concerns about AI disrupting software business models.
Channel checks revealed consistent strength across the company’s offerings. Partners reported solid demand for core products. Zero Trust and SASE categories showed particular traction.
Web application protection continues anchoring the business. Powell believes this market opportunity receives insufficient attention from investors. Partner feedback suggests sustainable growth in this segment.
Developer services represent an emerging catalyst. This area has accelerated in recent quarters according to partner reports.
The $199 price target implies roughly 25% upside from pre-upgrade levels. Powell’s research sample spanning over $100 million in sales provided conviction for the Buy rating.
The consistency of positive feedback across multiple partners strengthened the bullish case. BTIG’s upgrade reflects confidence in Cloudflare’s competitive positioning.
The analyst sees the company capturing market share in key categories. Product momentum appears to be strengthening rather than weakening.
Investors will get their next major data point on February 10. The earnings report will offer a chance to confirm trends Powell identified in his partner research.
The upgrade comes as software stocks face multiple headwinds. Valuation concerns and AI disruption fears have pressured the sector. The 33% decline since November created the opportunity Powell needed to turn positive on the stock.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
