Confluent Set to Capture Major Market Share with Unique Streaming Tech: Oppenheimer Analyst

Oppenheimer analyst Ittai Kidron initiated coverage on Confluent Inc CFLT with an Outperform rating and a price target of $37.

The analyst said that Confluent’s ability to bring event streaming and processing into a single unified platform is unique and positions it as the de facto technology leader in the category. He expects outsized gains.

Also Read: Confluent Has Big Potential in Cloud Expansion and Flink Launch, Analyst Gives A Thumbs Up

The analyst calculated Confluent’s total addressable market (TAM) at $51.6 billion in 2022, growing at a 14% five-year CAGR to $98.4 billion by 2027. 

Based on his 2024 revenue estimate, Confluent has barely tapped this TAM at a 1.3% share.

As per Kidron, Confluent’s multi-pronged land-and-expand model reflects its wide reach into the open-source community (Apache Kafka/Flink) and evolving maturity (on-prem, Cloud, enterprise focus).

The analyst noted Confluent is firmly positioned to benefit from the rising importance of real-time data in applications/analytics use cases. It has a large TAM, a growing market share, and competitive leadership. 

Also, Confluent is set for solid growth as it leverages a successful land-and-expand model, adds more enterprises, deepens account penetration, and drives cloud adoption. 

These, combined with technological leadership as the de facto standard for modern-day event brokers (Kafka) and event stream processing (Flink), made Kidron bullish on Confluent’s ability to outperform market expectations and sustain above-market growth for the foreseeable future.

Kidron projected revenue growth of +23% and +25% in calendar years 2024 and 2025 and noted multiple levers, including growing large customer adoption, direct sales motion traction, accelerated adoption of Confluent Cloud, and a sizeable open-source pipeline. 

While he expects aggressive product and GTM investment to drive this growth, he also believes Confluent is on target for FCF breakeven in calendar 2024 and can deliver operating margin improvement as revenue scales.

Confluent stock gained over 18% in the last 12 months. Investors can gain exposure to the stock via ProShares Big Data Refiners ETF DAT and Spear Alpha ETF SPRX.

Price Action: CFLT shares traded higher by 1.40% at $31.97 at the last check Friday.

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