Some tech stocks skyrocketed during the pandemic. The companies that offered video meetings, such as Zoom or Microsoft Teams, rallied as people used them for work or simply for communication. But there are other kinds of tech stocks that are also very successful. Internet operates on many levels, and if you want it to work flawlessly, you must cover all bases.
Cloudera offers its clients an enterprise data cloud for any data, from the AI to Edge. The company is prospering despite that pandemic. It outperformed while operating margins and cash flow, landing at 13.9% and $32 million, respectively. Besides, Cloudera’s subscription revenue growth came in at 17%, beating the Street’s 14.5% call while its ARR also surpassed the consensus estimate.
Morgan Stanley’s analyst Sanjit Singh noted that resilience within the customer base, along with sharp operational execution, helped management raise its FY21 subscription revenue outlook by 15% to $755-$765 million.
Singh specifically pointed to Cloudera’s Q2 performance. The results highlight that Cloudera is now a much more stable business – stated the analyst. However, Morgan Stanley thinks that the company is undervalued and thus poses an attractive buying possibility.
Why should investors choose this stock?
The company recently launched the CDP Public Cloud and CDP Private Cloud, and it’s CDP platform may become a key revenue driver. Analysts think that CDP can enable modest improvement in growth. Furthermore, Cloudera’s latest reports highlight management’s ability to meet investor expectations, as well as delivering key product milestones.
Experts believe shares are attractively valued with a new product cycle, low expectations, and achievable ARR estimates. And a growing focus on larger enterprises will likely provide leverage in the future, given their more attractive unit economics.
The stock’s average price target is $14.50, and in case of success, shareholders could gain 32% in the next year. However, Singh set his price target at $16 for this stock with 46% growth potential in the next year.