Goldman Sachs Reiterates Neutral Rating on Confluent Inc (CFLT)

Goldman Sachs analyst Kash Rangan reiterated a Neutral rating and $28.00 price target on Confluent Inc (NASDAQ: CFLT).

The analyst comments "We reiterate our Neutral rating and $28 PT on Confluent after attending Current 2024. We left with a better understanding of Confluent's product road map while also acknowledging a seemingly positive shift in customer’s appreciation of Confluent's price-to-value realization versus prior years. Product-wise, we took stock in Flink related developments – namely, supporting Table APIs (expanding the developer base to include Java and Python which are AI preferred development language), Private Networking (offering an additional layer of security for Confluent Cloud), and AI Model Inferencing (allowing users to leverage AI engines within Flink). Customers also exhibited appreciation for Confluent’s fully managed connector ecosystem, which could be a durable differentiator in an increasingly competitive space. Management also highlighted WarpStream, which offers a Bring Your Own Cloud (BYOC) environment that represents a hybrid solution between Confluent Platform and Cloud, while also enabling customers to maintain strong security and operations controls. While appreciating WarpStream's addition to the portfolio, we are still looking for further upside against Confluent Cloud. Additionally, while early, our customer discussions seemed to imply that Confluent does not hold a critical role in customers’ AI strategies, which we believe will become a growing portion of IT budgets. While appreciating Confluent's growing suite of offerings, after attending Current 2024, we look for the following trends to take hold before getting more constructive: 1) A better understanding of Confluent’s position within IT budgets, 2) Traction for Confluent’s AI offerings (e.g., AI Model Inferencing) that could prove to be durable medium-to-long term growth drivers, and 3) The evolution of competitive dynamics."

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Shares of Confluent Inc closed at $20.66 yesterday.

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