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Why Confluent Stock Was Racing Higher This Week

Motley Fool - Fri Dec 1, 2023

Data aggregating specialist Confluent(NASDAQ: CFLT) was having a good week on the stock market. As of early Friday morning, the company's share price had risen by nearly 11% week to date, according to data compiled by S&P Global Market Intelligence. An analyst's move and a tie-up with a famous enterprise software company helped push the stock upward.

Bernstein initiates with its equivalent of a buy

The big action in Confluent stock occurred on Tuesday, following the initiation of coverage by Bernstein analyst Peter Weed. The pundit's opening recommendation on the shares is outperform -- buy, in other words -- at a price target of $34 per share. That implies potential upside of more than 60%, even after the lift provided by the news.

Weed flagged Confluent as a solid play on the continued growth of cloud computing. He wrote that recent worries about increased client churn and slowing growth are overblown, and the company is poised to grab market share.

Two days after the Bernstein prognosticator's move, Confluent announced the availability of its offerings on SAP's online marketplace, the SAP Store. The Germany-based company is one of the top names in enterprise software globally, and Confluent's partnership with it can only bring the U.S. company more visibility and interest within the large SAP client community.

Guiding for disappointment

While these two news items were well in positive territory, some investors remain skittish about Confluent. That's largely because the company proffered rather dispiriting guidance in its third-quarter earnings released last month. The market has a long memory for weak guidance, and lingering negative sentiment over this might have prevented Confluent stock from moving higher on the latest developments.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Confluent. The Motley Fool has a disclosure policy.

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