Cloudflare Inc. (NYSE:NET) the stock is trading higher on Thursday after Goldman Sachs analyst Gabriela Borges upgraded the stock from Sell to Buy and increased her price target from $77 to $140.
According to the analyst, the performance of security stocks in 2024 can almost entirely be explained by the extent to which the market views each company as a platform rather than a one-off product.
Borges pointed to two catalysts for Cloudflare stock in 2025, including an improvement in the sales and marketing productivity cycle after two years of evolving to better manage platform sales across the enterprise and traction with products Act III for development services as Cloudflare applies its cutting-edge network architecture advantages to new AI inference use cases.
The price target increase reflects an increase in the multiple from 11x to 20x (5th and 8th quarter revenue), increasing the analyst’s 2026 revenue estimates by 2%, given his view on sales productivity and Act III.
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Borges changed its EPS estimates for 2024, 2025 and 2026 to $0.75, $0.90 and $1.32 from $0.75, $0.86 and $1.12, due to expansion slightly larger margin, marking the highest target multiple for its coverage.
Borges downgraded Check Point Software Technologies (NASDAQ:CHKP) from Buy to Neutral and increased the price target from $204 to $207.
The analyst highlighted that 2025 would be a year of additional investment for Check Point, as its new CEO evaluates growth priorities and the company accelerates its new SASE products. Overall, the analyst noted that EPS growth will be under pressure in 2025 and the stock generally follows EPS growth. He noted an opportunity to become more positive in 2026, as the path to 10%+ revenue growth and 20%+ EPS growth returns to the forefront if Check Point succeeds in converting additional investments into additional revenue growth.
Borges compared Check Point to software companies with less than 10% revenue growth and enough EPS to be valued using a P/E methodology. Relative to this peer group (2025 median P/E of 17x), Check Point offers similar revenue growth (6% by Street estimates vs. 6% for peers in 2025) but a better rule of 40 (~47 against 35).
The analyst also used the S&P 500 as a point of comparison: the S&P 500 trades at 22x 2025 EPS while delivering ~10% EPS growth; Compared to the S&P 500, Check Point delivers similar earnings growth across cycles.
Borges revised 2024, 2025 and 2026 EPS from $9.10, $9.75 and $10.95 to $9.10, $9.45 and $10.65 to reflect a trend in operating expenses consistent with recent history and introduced 2027 EPS of $12.25.