Confluent: Cloud Momentum Drives Re-Rating

Moretus Research
597 Followers

Summary

  • I initiate coverage on Confluent with a Buy rating and $36 PT, predicated on cloud momentum and a 21.5% CY25E revenue estimate.
  • Confluent trades at a 19.1% discount to peer group despite strong fundamentals (45% YoY cloud growth, $1.01bn RPO, 58% CY25E revs visibility).
  • Cloud, now 55% of sub revs, is a key lever for Confluent growth, supported by non-GAAP operating margin expansion and enterprise demand for AI/ML workloads.
  • Risks include hyperscaler competition, Kafka dependency, and regulatory headwinds, but we see these priced into shares, justifying our Buy rating and 9.5x EV/Sales multiple.

Futuristic data center

Eoneren/E+ via Getty Images

Thesis Summary

I initiate coverage on Confluent (NASDAQ:CFLT) with a Buy rating and $36 PT. Confluent offers a category-defining data streaming platform delivering real-time data integration and analytics for enterprises globally. My Buy rating is supported by my

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Moretus Research
597 Followers
Moretus Research delivers state-of-the-art, buy-side quality equity research for serious investors seeking clarity, conviction, and alpha. Focused on U.S. public markets, Moretus applies a structured, repeatable framework to identify companies with durable business models, mispriced cash flow potential, and intelligent capital allocation. Built on institutional standards, Moretus Research combines rigorous fundamental analysis with a high-signal, judgment-driven process—eschewing noise, narrative, and overly complex forecasting. Valuation is based on pragmatic, sector-relevant multiples tailored to each company’s business model and capital structure, with an emphasis on comparability, simplicity, and relevance. Research coverage tends to favor underappreciated companies undergoing structural change or temporary dislocation—situations where dispassionate analysis and variant perception can lead to asymmetric returns. All work reflects a deep respect for capital, discipline, and long-term compounding. Moretus Research aims to raise the standard for independent investment research—providing professional-grade insights, actionable valuation, and a strong filter for what truly matters in modern equity analysis.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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