Cybersecurity company CrowdStrike (NASDAQ:CRWD) is scheduled to announce its fiscal fourth-quarter results after the stock market closes on Tuesday, March 7. The company has a strong track record of beating the Street’s earnings estimates. Despite macro pressures, spending on cybersecurity has been resilient compared to other IT categories, which could help CrowdStrike exceed expectations.
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Analysts’ Q4 Expectations
CrowdStrike delivered market-beating results for the fiscal third quarter (ended October 31, 2022), with revenue rising 53% year-over-year to $581 million. Adjusted EPS increased 135% to $0.40 due to robust top-line growth and a higher adjusted operating margin.
However, the company noted that its net new annual recurring revenue (ARR) fell short of its own expectations, as macro challenges elongated sales cycles with smaller customers and led certain larger customers to select multi-phase subscription start dates.
CrowdStrike guided for slower growth in Q4 2022 compared to Q3 2022 to reflect the impact of macro pressures. It pegged Q4 2022 revenue to come in the range of $619.1 million to $628.2 million, reflecting a growth rate of 44% to 46%. Meanwhile, the company projected adjusted EPS to be between $0.42 and $0.45.
Analysts expect Q4 adjusted EPS to increase 43% year-over-year to $0.43, with revenue anticipated to increase 45% to $625 million.
Is CRWD a Good Buy?
Ahead of the results, Morgan Stanley analyst Hamza Fodderwala increased his price target for CrowdStrike to $150 from $135 and maintained a Buy rating. Fodderwala stated that the company “quickly went from a consensus favorite to a key battleground stock entering 2023.” Nonetheless, he feels that the market is now “overly bearish” on its growth prospects.
Fodderwala sees a long runway of ARR growth of 25% to 30%, based on an expanding addressable market, a huge enterprise installed base, and the “ability to lead in AI-driven threat detection.”
Overall, CrowdStrike scores a Strong Buy consensus rating based on 13 Buys and four Holds. The average CRWD stock price target of $139.67 implies 10.8% upside potential. Shares have rallied 22% year-to-date.
Conclusion
Macro pressures are expected to slow down CrowdStrike’s revenue growth rate in Q4. Nonetheless, Wall Street continues to believe in the long-term potential for CrowdStrike, supported by the robust demand for cybersecurity solutions.
