After underperforming in the Nasdaq composite index in 2021, CrowdStrike (NASDAQ:CRWD) stock continues to trend lower in 2022. The stock is already down about 15% this year, as overall selling in tech stocks and increased competitive headwinds remain a drag.
Although the descent in cloud-native cybersecurity platform stock has erased shareholders’ wealth, most analysts remain optimistic about its prospects.
One such analyst is Andrew Nowinski of Wells Fargo, who rated CrowdStrike stock as “Top Pick for 2022.” Nowinski sees multiple growth catalysts for CRWD, while his price target of $275 implies a solid upside of 58.2% to current levels. Let’s delve into the details.
Growth Catalysts
Nowinski remains upbeat about CrowdStrike’s expansion beyond traditional endpoints (including personal computers and laptops) and growth on the cloud front. It’s worth noting that during the Q3 conference call, CrowdStrike’s CEO, George Kurtz stated that the company’s footprint on the cloud front continues to expand at an accelerating pace.
Commenting on the opportunity, Nowinski stated, “As enterprises adopt more cloud-native toolsets, they will need to adapt their security infrastructure to protect those toolsets. Meanwhile, CrowdStrike leverages a three-pronged approach for mitigating these issues, with Falcon Cloud Workload Protection, Falcon Horizon, and Discovery for Cloud and Containers.”
Besides the cloud opportunity, Nowinski’s bullish outlook is also based on CrowdStrike’s ability to launch new products, which will likely expand its total addressable market (TAM). The analyst also highlighted CRWD’s strong annual recurring revenue (ARR) and strong cash flows that support its valuation.
While the analyst maintains a Buy rating on CrowdStrike, he remains concerned about the competitive environment. Nowinski said, “CrowdStrike faces competition from well-funded legacy vendors, as well as new vendors.” Furthermore, he expects aggressive pricing from the next-gen competitors, which could compress valuations for software companies.
Wall Street’s Take
Despite the competition, Wall Street has a bullish outlook on CRWD stock. Its Strong Buy consensus rating is based on 20 Buy, 3 Hold, and 1 Sell recommendations.
The average CrowdStrike price target of $279.95 implies 61% upside potential to current levels.
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