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Is CrowdStrike Stock Ready to Soar?
Stock Analysis & Ideas

Is CrowdStrike Stock Ready to Soar?

Shares of the cybersecurity company CrowdStrike Holdings (CRWD) have come under pressure recently, declining over 22% in one month against an escalating competitive landscape. 

Investors dumped CrowdStrike stock on fears that its rival, SentinelOne (S), is growing fast. It’s worth noting that SentinelOne added 600 new customers on a sequential basis during the last reported quarter. Moreover, its total customer count jumped 75% year-over-year to 5,400. 

Taking note of the growing competition, Morgan Stanley analyst Hamza Fodderwala maintained a Sell rating on CrowdStrike stock. 

Furthermore, TipRanks’ Stock Investors tool shows that investors who hold portfolios on TipRanks currently have a Very Negative outlook on CrowdStrike stock. Notably, about 5.5% of these investors lowered their exposure to CrowdStrike in the last 30 days.

Now What?

Despite the heightened competition, CrowdStrike continues to deliver stellar financial and operating performance. Recently, the company posted better-than-expected Q3 financial numbers and provided upbeat Q4 guidance.

Taking a note of its solid Q3 performance, Alex Henderson of Needham stated that CrowdStrike “is delivering best-in-class results.” 

Henderson added, “with expanding GM (gross margin), increasing ARR/new customer and strong 125%+ Net Retention, we expect pricing and market share concerns to fade.”

It’s worth noting that CrowdStrike delivered 67% growth in its ARR (annual recurring revenues) in Q3. Furthermore, it added more than 1,600 net new subscription customers for the second consecutive quarter in Q3. Meanwhile, its adjusted gross and operating margins expanded by about 100 and 500 basis points, respectively.    

The analyst has a Buy rating on CrowdStrike stock with a price target of $340 (62.4% upside potential).

Wall Street’s Take 

Along with Henderson, most of the analysts are bullish about CrowdStrike stock. However, Wall Street remains cautiously optimistic due to the increased competition. CrowdStrike stock sports a Moderate Buy consensus rating based on 12 Buys, 2 Holds, and 1 Sell. 

Meanwhile, CRWD scores a 5 out of 10 from TipRanks’ Smart Score rating system, indicating it could perform in line with the market averages.

The average CrowdStrike price target of $289.29 implies 38.2% upside potential to current levels. 

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed 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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