CrowdStrike (CRWD +2.84%) is getting a lot of love from Wall Street this month. Analysts are scrambling to update their models after the company defied the dour outlook for cybersecurity stocks, beating estimates and raising guidance in its latest report released Tuesday. As a result, CrowdStrike received at least 26 price target increases so far this week. Furthermore, of the 49 analysts that cover the stock, 46 rate it a buy or strong buy, and not one recommends selling.
NASDAQ: CRWD
Key Data Points
Can CrowdStrike stock get to $435?
The most bullish among those calls comes courtesy of Wells Fargo senior analyst Andrew Nowinski, who increased his price target to a Street-high $435, up from $380, while maintaining an overweight (buy) rating on the stock. Even after a stock price surge following its results on Wednesday, that new target still represents an upside potential of 32%.
The analyst highlights CrowdStrike's growth, profitability, and free cash flow, calling them "unmatched in the industry." He goes further, saying the company is "firing on all cylinders" and that competition isn't hampering its growth. Nowinski calls CrowdStrike a "top pick" for 2024.
It only takes a quick look at CrowdStrike's results to understand the excitement. Revenue grew 33% year over year, driving earnings per share up 102% -- both beating expectations. The company's customer base grew, and existing users adopted more modules, making the service even stickier.
Several factors shined a light on CrowdStrike's future potential, and things are looking up. Annual recurring revenue -- a measure of the company's subscription growth -- climbed 34% to a new record, while profit and free cash flow also grew to new heights.
A price worth paying
The numbers speak for themselves, but there's a catch. CrowdStrike is not cheap, no matter what metric you prefer. However, at less than 16 times forward sales, the valuation is roughly half its three-year average. Investors historically award a premium to a company with a strong track record of growth, and CrowdStrike certainly fits the bill, but it isn't for the faint of heart.
