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CrowdStrike Rules Endpoint Security, Street Hopeful
Stock Analysis & Ideas

CrowdStrike Rules Endpoint Security, Street Hopeful

Cybersecurity company CrowdStrike (CRWD) is benefiting from the burgeoning demand for cyber-security solutions owing to the rising sophistication in cyber breaches Rapid digital transformation and cloud migration taking place across industries are key growth drivers.

Ahead of the release of its third-quarter fiscal 2022 on December 1, Deutsche Bank analyst Patrick Colville looked into CrowdStrike’s developments to see how the company stands. (See Analysts’ Top Stocks on TipRanks)

Endpoint Security Game Strong

Colville found out that enterprise spending on cybersecurity remains high. Moreover, demand for endpoint security, which is one of the niche markets that CrowdStrike serves, is strong. CrowdStrike remains the most favored vendor in the endpoint security space.

The analyst noted that there is a greater demand for EDR (endpoint detection response) and MDR (managed detection response) products from clients. This is expected to have been a positive influence on the top line during Q3.

“Our checks suggest that in the enterprise (market) CrowdStrike remains strong due to its scaled go-to-market — presales support, partnerships, large enterprise reference customers,” noted Colville.

He also observed that the high demand for CrowdStrike’s antivirus as a replacement of Symantec, McAfee, Trend Micro, and Sophos is the current trend.

Intensifying Competition

CrowdStrike faces competition from numerous companies in the security application market. The security market is hot with relentless Internet threats and attacks, and increasing competition is only natural.

Colville notes that there is an increased level of competition from SentinelOne and Microsoft (MSFT) in the midmarket.

Q3 Expectations

Colville expects annual recurring revenue (ARR) to see solid growth both sequentially as well as from the last year’s quarter. “Our checks suggest pipelines indicate no signs of any slowdown into the end of CY21,” he said.

The analyst thinks that CrowdStrike is likely to provide an Q4 revenue outlook of $410 million, indicating 55% year-over-year growth.

Expert Hopeful of the Stock

Colville reiterated a Buy rating on the CrowdStrike stock. However, he lowered his price target to $300 from $320, taking into account the competition.

Nonetheless, despite the near-term competitive risks, Colville believes that CrowdStrike is poised for solid returns over the longer term. “For investors who can own the stock with duration, we still believe that CrowdStrike has a market-leading product and is executing well against its opportunity”.

Wall Street’s Take

The Wall Street analyst consensus carries an optimistic stance on CrowdStrike, with a Strong Buy rating based on 16 Buys, three Holds, and one Sell. The average CrowdStrike price target of $313.53 indicates an upside potential of 34.9%.

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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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