Needham analyst Mike Cikos maintained Confluent Inc (NASDAQ:CFLT) with a Buy and raised the price target from $23 to $30.
The analyst added CFLT to Needham’s Conviction List as the Infrastructure and Analytics Software top pick in 2024, replacing MongoDB, Inc (NASDAQ:MDB).
Despite a recent run-up, Confluent is still 17% below its pre-3QCY23 earnings print – providing a compelling opportunity, the analyst writes.
Cikos sees multiple growth vectors in CY24 deriving from the go-to-market and product roadmap.
Over the next twelve months, the analyst noted that Confluent outperformed his coverage due to the upward estimate revisions and multiple expansions.
Also Read: Confluent’s Cloud Focus Aligns With Long-Term Growth, Analyst Projects Upswing In CY24 Performance
The CY24 catalysts included go-to-market transformation where 100% of sales reps’ compensation is based on Consumption and New Logos (versus 10%-15% in CY23).
Also, Flink becomes generally available in 1QCY24, which Cikos noted can lead to scaling revenue contribution in 4QCY24 into CY25.
Additionally, investments in the product roadmap should result in FedRAMP authorization exiting CY24.
The management’s CY24 outlook already incorporated multiple headwinds, the analyst noted.
The analyst projected Q4 revenue and EPS of $205.4 million (consensus $205.3 million) and $0.05 (consensus $0.05).
Price Action: CFLT shares are closed lower by 2.91% at $22.72 on Tuesday.
