Cloudflare (NET) remains a "best athlete" in the software sector with the consistent execution of its expanding competitive moat, Morgan Stanley said in a Friday note.

The firm posted another "strong" quarter across the board with over 29,500 net new customers, and total revenue increased 31%, surpassing consensus expectations, the report said.

The note also pointed to growth driven by sustained momentum with large customers and longer-duration contracts. It added that Q4 guidance also exceeded expectations across all metrics.

"The sustained growth momentum should support the premium multiple," the report said. Morgan Stanley kept its overweight rating and raised its price target to $258 from $235.

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