Cloudflare (NYSE:NET) helps businesses detect and eliminate cyber-threats. Without a doubt, the cybersecurity-software niche market is here to stay, and NET stock offers pure-play exposure to it.
However, investors should be aware of a well-known tech titan that could steal market share from Cloudflare.
As we’ll discover, there are at least two experts on Wall Street who seem optimistic about Cloudflare’s future prospects. It’s actually not a bad idea to have one or more high-conviction cybersecurity stocks in one’s portfolio.
So, does Cloudflare make the grade? Let’s dive into the details now, starting with a couple of price-target hikes.
NET Stock: What’s the Word on the Street?
Generally speaking, Wall Street is lukewarm about Cloudflare. Out of 22 top analysts, 10 issued a “Buy” (or equivalent) rating, while another 10 issued a “Hold” rating. Meanwhile, only two analysts rated NET stock a “Sell.”
Cloudflare has some supporters, though. For instance, two independent research firms reportedly praised Cloudflare for its Cloudflare One security/networking solution.
JMP Securities analyst Trevor Walsh raised his price target on NET stock from $60 to $75, citing cyber spending as a top priority due to the persistence of significant cyber-attacks.
Also, Baird analyst Shrenik Kothari lifted his price target on Cloudflare shares from $59 to $64, noting Cloudflare’s “high-speed network efficiency” as the company’s major competitive edge.
Cloudflare Has a New Rival
Clearly, Cloudflare has a prominent place in the network-security niche. However, it would be a problem if a big company came along and took market share from Cloudflare.
That scenario could play out in the near term, as none other than Microsoft (NASDAQ:MSFT) is reportedly venturing into the network edge security market.
Specifically, Microsoft unveiled Entra Internet Access, a “secure web gateway” that can protect “internet, software as a service, and Microsoft 365 apps and resources” from cyber-threats.
Microsoft introduced Entra Private Access, which reportedly offers secure “access to private apps and resources.”
In the coming weeks and possibly even months, NET stock could lose value as financial traders weigh the implications of Microsoft directly threatening Cloudflare’s core business segments.
The network-security market may grow over the coming months and years. If that’s the case, then there could be enough room for Microsoft and Cloudflare to co-exist.
Therefore, competition from Microsoft won’t necessarily be a deal-breaker for some NET stock investors.
NET Stock Is Worth Considering
MSFT stock doesn’t offer pure-play exposure to the cybersecurity-software industry. Hence, some investors with a strong conviction in this niche market might think about adding a few Cloudflare shares to their portfolio.
The important thing is to keep tabs on the competition between Microsoft and Cloudflare, and to be agile with your stock allocations. With all of that in mind, NET stock gets a solid “B” grade.
It’s decent if not outstanding, so feel free to investigate Cloudflare and make your own determination.
On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
