Cybersecurity company CrowdStrike Holdings, Inc. (NASDAQ:CRWD) recently posted better-than-expected performance for the third quarter. Both its top-line as well as bottom-line exceeded analysts’ estimates.
Double-digit growth in subscription revenue, as well as professional services revenue, helped CRWD increase its top-line by 63% over the prior year. Additionally, earnings per share (EPS) more than doubled during the comparable period.
With these positives in mind, let us take a look at the changes in CRWD’s key risk factors that investors should know.
According to the TipRanks Risk Factors tool, CRWD’s top risk category is Finance & Corporate, contributing 44% to the total 59 risks identified. In its recent quarterly report, the company has changed one key risk factor under the Finance & Corporate risk category.
CRWD noted that as a part of its business strategy, it has in the past and expects in the future to make investments in or acquire complementary companies, services, or technologies. CRWD’s ability to make such acquisitions and integrate its operations is not guaranteed. Further, it may not be able to find suitable acquisition candidates and may not be able to complete such acquisitions on favorable terms. (See Insiders’ Hot Stocks on TipRanks)
Additionally, along with the difficulties in spotting and integrating such businesses, these activities may also divert the attention of CRWD’s key management personnel, disrupt its operations, dilute value for its investors, and negatively impact the company’s financials.
Compared to a sector average of 40%, CRWD’s Finance & Corporate risk factor is at 44%.
Wall Street’s Take
On December 2, D.A. Davidson analyst Rudy Kessinger reiterated a Buy rating on the stock, but decreased the price target to $265 from $320 (29.7% upside potential).
Although the analyst noted CRWD’s robust Q3 performance and a strong pipeline, Kessinger cited lower multiples of CRWD’s peers and a recent pullback in the broader market as factors for the lowered target price for the stock.
Consensus on the Street is a Strong Buy based on 13 Buys, 2 Holds, and 1 Sell for the stock. The average CrowdStrike price target of $289.20 implies a potential upside of 41.5% for the stock. That’s after a 27.8% drop in CRWD’s share price over the past month.