CrowdStrike (NASDAQ: CRWD), a global cybersecurity company, saw its shares close over 8% higher on Monday, May 8. This surge in value came not from company-specific news but rather from a boost in investor confidence following the announcement of better-than-expected preliminary Q3 results from peer Zscaler (NASDAQ: ZS). This positive sentiment has spread to other cybersecurity companies, including CrowdStrike.
2022’s Underperformance Gives Way to Impressive Gains
Year-to-date, CrowdStrike has shown strong performance with a stock increase of about 26% after underperforming the broader markets in 2022. A rapidly growing subscription customer base, which includes top banks and leading Fortune 500 companies, has played a significant role in the company’s recent success. CrowdStrike is also witnessing more customers adopting its multiple modules, which is expected to drive higher average revenue per user and support margins.
Strong Annual Recurring Revenue as Customer Base Grows
Owing to its expanding customer base, CrowdStrike’s subscription ARR (annual recurring revenue) remains robust. This key performance indicator demonstrates the company’s ability to generate consistent income from its subscription services, ensuring financial stability and growth prospects.
Q1 Fiscal 2024 Financial Results Announcement Looms
CrowdStrike is set to release its Q1 financial results for Fiscal 2024 after the market closes on Wednesday, May 31. Management expects to report revenues in the range of $674.9 – $678.2 million, reflecting a year-over-year growth of 38-39%. Analysts predict CrowdStrike will report total revenue of $677.38 million, signaling a positive outlook for the company.
Earnings Expectations Point to Further Growth
For Q1, CrowdStrike anticipates reporting earnings in the range of $0.50 to $0.51 per share, compared to an EPS of $0.31 in the prior year. This increase aligns with analysts’ expectations, who predict CRWD will post earnings of $0.51 a share in Q1.
Rosenblatt Securities Initiates Coverage with a Buy Rating
On May 1, Catharine Trebnick of Rosenblatt Securities initiated coverage on CrowdStrike stock, issuing a Buy recommendation and a price target of $170. This vote of confidence comes as a result of the company’s differentiated cloud-security platform, operating margin leverage, and “extensible platform reach” that goes beyond traditional endpoints such as PCs and laptops.
Strong Free Cash Flow Growth Supports Premium Valuation
Trebnick also expects CrowdStrike to continue delivering robust free cash flow growth at scale, which she believes will justify the company’s premium valuation. The combination of a growing customer base and innovative technology solutions positions CrowdStrike as a leader in the cybersecurity industry.
Analyst Consensus: Strong Buy for CRWD Stock
According to TipRanks, CrowdStrike stock has a Strong Buy consensus rating, reflecting 30 Buy and three Hold recommendations. The analysts’ average price target of $167.60 suggests an upside potential of 26.58%, indicating a promising outlook for the company’s stock.
The Future of Cybersecurity and CrowdStrike’s Role
As cyber threats continue to evolve, the demand for cutting-edge cybersecurity solutions is expected to grow. CrowdStrike’s impressive performance and rapid customer base expansion signal the company’s potential to become a major player in the market. With strong financial results expected and a positive analyst consensus, CrowdStrike is well-positioned to capitalize on the growing cybersecurity industry and reward investors with continued growth.
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