We all know that the tech sector is hot right now. From semiconductors to generative AI, the tech industry has a vast and varied group of players, each contributing unique advancements to technology’s evolution.
Therefore, the tech market is very competitive right now. When investing, it’s important to look at the stock’s performance by knowing its financial metrics and the company’s strategic outlook.
CrowdStrike Holdings is contributing highly to the digital security arena at a time when the internet’s vulnerability to corruption is a growing concern. CRWD’s stock has continued to thrive and grow, beating analysts’ earnings estimates for over a dozen consecutive fiscal quarters.
Putting a spotlight on CrowdStrike (CRWD), we will see the pros and cons and discover its performance and potential. Analysts are strongly recommending this tech innovator…
CrowdStrike Holdings Inc. (CRWD)
CrowdStrike distinguishes itself in the cybersecurity sector with its cloud-native approach, notably replacing on-site appliances with the “Falcon” endpoint security platform, which addresses common complaints of space, maintenance, and costliness. Since its IPO in 2019, CRWD’s revenue has grown at an impressive average annual rate of 67% until a recent slowdown.
The recent slowdown has been attributed to headwinds impacting software spending. However, during a recent conference call, CEO George Kurtz expressed optimism and confidence in CRWD’s ability to generate double-digit revenue growth in the second half of 2023. CRWD’s CFO, Burt Podbere, echoed Kurtz’s sentiment and emphasized the potential for growth despite the challenging environment.
CRWD actively encourages existing customers to adopt more cloud-based modules, with 41% of its subscribers now using at least six of them. CRWD’s revenue outlook for 2023’s latter two quarters suggests a slowdown from last year, but it would still exceed Wall Street analysts’ forecasts.
CrowdStrike’s current price against its 52-week high/low:
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CRWD is up year-to-date by 53.15%, has a positive 20/200 day SMA (simple moving average), and carries a modestly healthy TTM (trailing twelve-month) free cash flow of just over $1 billion. On a GAAP (generally accepted accounting principles) basis, CRWD achieved a net profit of $8.5 million for Q2 2023, marking its second consecutive quarter of profitability. During its Q2 earnings call, CRWD surpassed analysts’ projections, reporting EPS of $0.74 per share vs. $0.56 per share as expected, winning by a 53.15% margin; it beat revenue slightly by 0.96%. CRWD currently holds a 0.96 beta score, which indicates that the stock doesn’t need to worry much about broader volatility in the market.
CRWD also reported year-over-year growth in some crucial areas like revenue (+36.71%), net income (+117.19%), net profit margin (+112.60%), and operating income (+68.18%). CRWD is slated to report earnings again on November 29th, and analysts predict $774.5 million in sales with an EPS of $0.60 per share and a whopping expected 3-5 year EPS growth rate of 170.6%.
CRWD’s stock only saw modest gains after its latest and remains around 50% below its all-time high. However, this shouldn’t be seen as a bad thing because it presents an opportunity for investors to consider accumulating shares in CRWD before the business experiences a potential resurgence.
It’s important to note that while CRWD’s sales growth isn’t as explosive, it’s still expanding its subscription margin (currently 80%) and its cost management capabilities. The disciplined approach to stock-based compensation expenses has contributed to back-to-back profitable quarters.
Looking ahead, CRWD anticipates a significant rise in adjusted EPS (85% year-over-year growth in Q3 and 84% for the entire year), exceeding Wall Street’s expectations. CRWD’s valuation remains justified by its “first-to-the-party” advantage in the cybersecurity space. It has its share of bullish analysts; CRWD boasts 12 “strong buy” ratings, 28 “buy” ratings, and 6 “hold” ratings. With a 10-day trading average volume of 4.65 million shares, CRWD has an average price target of $180, with a high of $250 and a low of $150; this represents a potential increase of just over 55% from its current trading price. While it isn’t likely to skyrocket tomorrow morning, there is absolutely long-term potential to be found here, and analysts agree that CRWD does well in representing a promising long-term growth opportunity for investors.
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