Data streaming specialist Confluent's (NASDAQ: CFLT) stock was streaming in the wrong direction these past few trading sessions. A fairly aggressive price target cut from an analyst was a catalyst for this, and the share price was down by almost 13% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
A big chop from a bull
The downgrading party was Truist Securities analyst W. Miller Jump. As part of a broader analysis of the infrastructure and security software tech segments he enacted a double-digit reduction on his Confluent price target. It's been lowered to $35 per share from the previous $40. He maintained a buy recommendation on his stock nevertheless.
According to reports, Jump feels that investor sentiment on the two segments is worsening due to uncertainty over policy decisions taken by the current presidential administration. The current trend of downsizing federal departments also threatens companies with significant government business.
Confluent's stock hit a year-to-date peak in mid-February after the company published its fourth-quarter and full-year 2024 results. The company continued to post double-digit increases in revenue with a 23% year-over-year rise in the quarter to $262 million. It also pleased investors by announcing not one but two business collaborations.
Fear is affecting sentiment
But many investors are fearful these days, and as Jump rightfully pointed out companies exposed to the public sector are vulnerable just now -- no matter how well they might have performed in the recent past. Given that, caution on Confluent's shares is entirely warranted now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Confluent. The Motley Fool has a disclosure policy.
