BofA analysts initiated Cloudflare (NYSE:NET) with an Underperform rating and a $52 per share price target on Thursday.
They told investors in a note that the company has a solid foundation, "but the clouds may be rolling in."
"We commend the company for its strength in web delivery & web security, however we think that the company faces two major challenges: softening enterprise demand and convincing customers to adopt new solutions like Zero Trust and Edge Compute," said the analysts.
"We believe that the challenges to address the enterprise market could translate into lower estimates than the Street anticipated, and our CY24 billings growth estimate of 27% is slightly lower than the Street's 29%," they added.
According to BofA, the web delivery, compute and security company, which trades at just above the $63 mark, is expensive compared to its peers.