Cloudflare Stock Slides – Analyst Issues ‘Sell’ Rating, Citing Valuation Concerns

Cloudflare’s stock (NYSE: NET) is down 2.9% today, under a bit of pressure, with the latest update from DZ Bank analyst Axel Herlinghaus downgrading the stock from “Buy” to “Sell,” setting a price target of $170.

This represents a significant shift in sentiment for company.

The stock is currently changing hands around $192, with the $170 price target suggesting considerable downside here.

The downgrade arrives after a period of strong performance for Cloudflare. In the month leading into today’s session, NET has risen approximately 8%.

Cloudflare’s stock price has been on a tear in recent periods, with 70% in gains since the start of the year, and 140% in 12 months putting valuations in question, which is what the downgrade centers on.

DZ Bank is not alone in expressing concerns. Susquehanna and Jefferies Financial Group both lowered their price targets in May to $140 and $150, respectively.

Momentum stocks have in recent times traded significantly out of sync with usual valuation methods, although that does not mean all will continue to do so. Momentum by it’s very nature is changeable, and you certainly do not want to be on the wrong side if there is a meaningful shift.