Benzinga | Dec 1, 2020 01:08PM EST

KeyBanc Initiates Coverage On Cloudflare Amid New Products

Although shares of Cloudflare Inc (NYSE:NET) have appreciated by around 300% year to date, the stock may be interesting for high-growth software investors, according to KeyBanc Capital Markets.

The Cloudflare Analyst: Alex Kurtz initiated coverage of Cloudflare with an Overweight rating and a price target of $87.

The Cloudflare Thesis: The company is commencing "a multiyear campaign to reinvent core Infrastructure as a Service" and its platform could over time address a market size of $69 billion, Kurtz said in the note.

He added that Cloudflare's serverless Workers product is likely to become a core competitor to Amazon.com, Inc's (NASDAQ:AMZN) AWS Lambda.

"We expect Cloudflare will be approaching $424M in revenue in CY20 (+48% y/y) and on pace to top $800M in ARR by 4Q22 driven to date by building a scalable global network that can enable G2Ks to quickly deploy Firewalls/DNS/DDoS servers as a Service and Load-Balancing as a Service (these products have helped drive customer count from 35K in CY16 to 103K in our 4Q20 estimate)," the analyst wrote.

NET Price Action: Shares of Cloudflare declined by 4.5% to $71.70 at the time of publication Tuesday.