Capitalizing on the work from home shift and move towards cloud computing, cybersecurity company CrowdStrike (NASDAQ:CRWD) stock can be expected to move higher.
CRWD stock has been red hot this year, rising more than 100% year-to-date. In June alone, the company’s stock price rose 14.2%, according to S&P Global Market Intelligence.
This is especially impressive when one considers that CrowdStrike has only been publicly traded for a year. The company had its initial public offering in June 2019, where it debuted at $34 per share. Since then the trajectory has been straight up for CRWD stock, especially since the novel coronavirus pandemic caused a boom in remote work.
After bottoming at $39.55 per share when the markets crashed in March, CrowdStrike’s share price has climbed more than 200%.
Fueling the rapid growth has been CrowdStrike’s aggressive acquisition of customers, which has accelerated since the pandemic, and totaled 6,261 at the end of the company’s first quarter in April, up 105% from a year earlier.
The company’s revenue expansion has also been healthy and is forecast to reach $1 billion by 2022. CrowdStrike is an expert in endpoint security and provides protection across cloud, mobile devices and Internet of Thing (IoT) devices that are driving the current technology momentum.
Going forward, the company is likely to continue to experience robust growth as demand for cybersecurity, particularly endpoint security, rises as people make remote work a permanent arrangement.
Simplicity Is Key
A lot of CrowdStrike’s success comes from the fact that the company’s cybersecurity applications are simple and efficient. Its cloud-based endpoint security solution, which consists of software that protects computers and mobile devices from anywhere through the cloud has been praised for being intuitive and easy to use.
Management at CrowdStrike likes to say that its software works invisibly behind the scenes to protect devices, and, unlike many lower end security and virus protection programs, it does not slow down devices.
CrowdStrike’s Falcon software protects multiple devices, or endpoints, at once. With CrowdStrike, desktops, laptops, smartphones and tablets are all protected simultaneously. Any device requiring a log-in is covered by CrowdStrike’s cloud-based software. This thoroughness of protection and the simplicity of the product is what has led organizations and individuals to sign-up for CrowdStrike in droves.
Operating under the tagline “We stop breaches,” CrowdStrike has won rave reviews and customer loyalty for its software. Current customers include investment bank Goldman Sachs (NYSE:GS), Amazon (NASDAQ:AMZN) Web Services (AWS), and the computer and engineering mecca that is the Massachusetts Institute of Technology (MIT). Several U.S. state and municipal governments also rely on CrowdStrike to protect their servers, files and computers. The company also helps run cybersecurity investigations for the U.S. federal government.
CrowdStrike has tracked North Korean hackers for more than a decade, and the company was hired in 2016 by the Democratic National Committee to investigate a hack of its server, which it determined was caused by Russian agents. These high-profile cases have brought CrowdStrike public notoriety and a reputation for uncovering wrongdoing.
Profitability and Competition
If there are areas of concern for CrowdStrike it is rising competition and a lack of profitability. As a recently public company, CrowdStrike remains unprofitable.
It spent a bundle on sales and marketing in the lead up to its IPO, accounting for 55.4% of revenue last year. The company accumulated $62.6 million of non-GAAP losses in 2019. However, profitability is close at hand.
In its first quarter analyst call, management forecast that their net losses will decline to a range of $22.1 million to $29.3 million by the end of this year due mainly to strong customer growth. Also for the full year, CrowdStrike is targeting revenue of $761.2 million to $772.6 million, which would represent annual growth of roughly 59%. CrowdStrike is valued at roughly 29 times this year’s forecasted sales.
While CrowdStrike is moving closer to profitability, it faces growing competition in the cybersecurity space. Companies such as Trend Micro, Bitdefender and Carbon Black are closing in on CrowdStrike with similar offerings designed to protect computers and other electronic devices from cyber threats and hacks.
CrowdStrike will have to remain nimble and innovative to fight off the increasing number of competitors that are aiming to takeaway market share. Going forward, many analysts are looking for CrowdStrike to develop new products and services to retain existing customers and continue attracting new ones.
Analysts Remain Bullish On CRWD Stock
Despite its strong run since its IPO, and some potential pitfalls on the road ahead, analysts remain bullish on CRWD stock. Leading analysts have been raising their price targets on CRWD stock in recent months.
Oppenheimer, JPMorgan and Goldman Sachs each raised their rating and price target on CrowdStrike in June. Currently, 20 analysts have 12-month price forecasts for CrowdStrike, and the median target is $115 per share, with a high estimate of $125 and a low estimate of $80.
The median price target represents a 10.9% increase from the last closing share price of $103.71 a share. The current consensus is to “buy” CRWD stock. There are no “sell” ratings on CrowdStrike’s stock.
The bottom line is that CrowdStrike remains a fast-growing technology company with plenty of upside potential. The shift to remote work has only served to accelerate the growth of CrowdStrike’s customer base and revenues.
With profitability just around the corner and analysts singing the praises of its product offerings, now is the time to grab shares and hold on for the ride ahead. CrowdStrike should remain a leading technology player for many years to come.
As of this writing, Joel Baglole held shares of GS stock.