CrowdStrike Earnings Preview: RBC Boosts Price Target Into Print


Cyber-security stock CrowdStrike (CRWD) is gearing up to report its earning results on September 2. Going into the print, RBC Capital’s Matthew Hedberg has reiterated his buy rating while boosting his price target from $115 to $120.

“Based on bullish checks, we expect CrowdStrike to deliver strong Q2/21 results and guidance, as we think it should continue to see tailwinds from both the macro and competitive environment” cheered the analyst.

He notes that investor sentiment remains strong following Q1/20 results, with shares +27% vs. the S&P 500 +12%.

Citing positive checks that indicate robust adoption and good linearity, Hedberg now expects upside to consensus revenue/ARR of $188.6M/728.7M, or 74%/72% growth, respectively vs. 85%/88% last quarter.

That’s alongside subscription revenue of $175.0M, +79%, vs. consensus of $173.4M, +78%, and +89% in Q1/21. (See CrowdStrike stock-price forecast on TipRanks)

“While we think demand trends have been positive based on channel conversations, guidance includes increased assumptions around contraction and churn, which could create room for upside” the analyst told investors.

He notes that CRWD beat revenue expectations by 6.7% on average over the last four quarters, and ARR by 6.9% over the last three quarters; and as a result he thinks revenue and ARR growth in the low-80% range seems likely.

Looking forward, the analyst is anticipating Q3/21 revenue of $196.0M vs consensus of $195.9M; and FY/21 revenue of $770.6M vs the midpoint of guidance at $766.9M and consensus of $772.2M.

Net-net, Hedberg likes the opportunity for long-term profitable growth post COVID as CrowdStrike continues to innovate. “We think the company will remain disruptive against legacy peers while continuing to expand its TAM through platform expansion into areas beyond AV and laptops/desktops, into protecting cloud workload and other modules such as VM and IT Hygiene” the five-star analyst concluded on August 27.

Overall, CRWD scores a cautiously optimistic Moderate Buy Street consensus, with 15 recent buy ratings offset by 6 hold ratings. Meanwhile the average analyst price target of $115 indicates 3% downside potential from current levels, with shares up an impressive 137% year-to-date.

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