Confluent Stock Jumps After Q3 Results Beat Estimates

Wavy (CFLT) stock jumped 8% after the data software company posted third-quarter results late Monday. The company’s shares also rose earlier this month after a report that it was attracting takeover interest.

Confluent said its adjusted earnings increased 30% year over year to 13 cents per share in the quarter ended September. That beat estimates of 10 cents per share before the report, according to FactSet. Sales increased 19% to $298.5 million, beating analysts’ estimates of $292.9 million.

Confluent offers cloud-based data flow software, which is described as a central nervous system that helps organizations move and sort data instantly. The 10-year-old company had previously attracted investors’ attention as an AI toy, due to the data-hungry nature of its AI models.

But this year has mostly been a struggle, with the stock down 21% ahead of Monday’s earnings report. Shares fell more than 30% after the company’s second-quarter earnings report in late July, which included sales forecasts lower than those of Wall Street analysts.

Amid the struggles over Confluent shares, the company has explored a sale, according to a Reuters report earlier this month. Wavy shares jumped 8% after the October 8 report.

Confluent leaders did not address that report during a conference call with analysts Monday night. Confluent CEO Jay Krebs called the quarter “strong” in his remarks.

“As AI evolves from innovation to use, context will determine who wins,” Krebs said, according to a FactSet transcript. “We are committed to making Confluent the company that enables this transformation by transforming data into constantly updated and trustworthy context for AI systems everywhere.”

The stock’s wavy eyes flared

Wavy shares advanced more than 7% at 23.68 in recent trading on the stock market today. The action resulted in choppy trading just below a cup-with-handle buy point of 24.14, according to IBD MarketSurge. Shares briefly broke above those levels in earlier trading.

At the same time, crispy The stock has an IBD Composite Rating of 66 out of 99, according to IBD Stock Screener. The score combines five separate property ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.

Analysts were largely positive after the results, especially for Flink, the data streaming service the company launched within its broader Confluent Cloud offering last year.

“We are encouraged by the overall results and Flink’s growing momentum,” Mizuho analyst Greg Moskowitz wrote to clients Tuesday morning. “However, given the many starts and stops, the most significant reclassification will likely require a few quarters of good execution.”

Moskowitz reiterated his call for an outperform on Confluent shares and raised his price target to 26 from 24.

“Rhythm has not been stellar in terms of revenue,” Barclays Raimo Lencho wrote to clients. “However, after two weak quarters and with early signs of new product momentum, we see this as good enough to make investors reconsider the name.”

He rates the ripple stock an overweight, or buy, with a price target of 27, up from 24 before the report.

Meanwhile, Jason Adair, an analyst at William Blair, wrote, “Patient investors will be rewarded at the current valuation, with the potential to buy potentially creating a floor for the stock in the low $20s.” He rates Confluent as superior.

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