- An analyst upgrade has sent CrowdStrike (CRWD) stock moving much higher.
- Continued instability in Eastern Europe and possible reprisals give relevance to cybersecurity.
- It’s an obvious idea but that doesn’t impugn its potential.
In a market environment where people are constantly seeking a contrarian edge, the concept of adopting a traditional outlook might in contrast seem risky. But that’s the situation that cybersecurity technology firm CrowdStrike (NASDAQ:CRWD) finds itself in. Recently, Goldman Sachs (NYSE:GS) analyst Brian Essex enthusiastically endorsed CRWD stock for the obvious reason. Sometimes, though, there’s nothing wrong with the intuitive wager.
Recently, Essex upgraded his rating on CRWD stock to “buy” from “hold,” raising his price target to $285. Previously, the Goldman analyst forecasted that shares would hit $270. Not surprisingly, CRWD stock bounced higher following the announcement. Even better, CrowdStrike has not demonstrated a waning of momentum.
For the April 13 session, CRWD stock soared over 7%. Over the trailing five days, the security is up just under 4%. After getting off to a rough start in 2022, CRWD has enjoyed fresh focus (albeit cynically), bringing its year-to-date tally to a gain of 10%.
Acknowledging earlier challenges, Essex pointed out the pressing catalyst. “The global threat environment remains elevated and initial channel conversations indicate that the Russia/Ukraine war is driving even greater levels of demand.” As a result, the analyst sees that CRWD stock is “well positioned in the sweet spot of demand ahead of accelerating deterioration of the threat environment.”
But can this more than month-old argument continue to hold water? Likely it can and here’s why.
| CRWD | CrowdStrike | $224.99 |
CRWD Stock May Have a Long Upside Pathway
Seemingly everyday now, the brutality of the Russian occupation of Ukraine is coming to light, drawing fierce criticism from international leaders. Recently, President Joe Biden echoed the sentiments of Ukrainian President Volodymyr Zelenskyy, who understandably phrased the conflict in the most distressing terms possible.
Over time, it’s very likely that global policymakers and the mainstream media will pivot toward providing a “directional” angle in their assessment and coverage. Stated differently, one of the challenges with a neutral angle is that it gives moral equivalency to opposite parties of a crisis. When civilian casualties are involved, though, it’s difficult to say both parties’ moral compasses are perfectly split 50/50.
Unfortunately from the perspective of the ongoing violence, such a reputational pivot will make it extremely challenging — if not outright impossible — for Russian President Vladimir Putin to save face. An op-ed from the University of California, Riverside touched on this point last month. Today, no offramp appears on the horizon for Putin.
Again, this is incredibly tragic for the cause of humanity and common decency. However, it does mean on a cynical basis that CRWD stock will accrue further relevance. As many folks have noted, the conflict isn’t just a war waged on the analog battlefields but also in cyberspace.
Just like certain defense firms benefited from a real-time case study of combat effectiveness of their underlying products, CRWD stock could also rise from a similar narrative.
CRWD Stock: Watching Out for Payback
One of the concerns just before Russia invaded Ukraine was the very real possibility of cyberwarfare being waged on our country. Increasingly, cyberattacks have expanded their scope of harm, no longer representing mere annoyances but actions that could lead to severe economic harm, even death.
Indeed, many cybersecurity experts have warned that attacks in the digital realm can lever unimaginable consequences in the analog world. By attacking key infrastructure — think water pipelines or nuclear power facilities — nefarious actors could wreak utter devastation.
So far, the response has been muted although that doesn’t mean the Kremlin isn’t trying. Several days ago, the New York Times reported that the U.S. government secretly removed malware from computer networks worldwide in an effort to preempt Russian cyberattacks. Thus, it would be unwise to conflate present quiet with no imminent action.
Though terribly cynical, such circumstances bolster the bullish case for CRWD stock. To be sure, no one wants to present an argument to buy a particular equity unit simply on the assumption that state actors will lob cyberattacks against the U.S. and western allies.
But here’s the thing: it’s just our reality, our new new normal. Therefore, I don’t think investors need to have moral qualms about CRWD stock. Arguably, acquiring CrowdStrike is the right thing to do.
We Didn’t Start the Fire
Although the issue about investing under the shadow of armed conflict is a controversial idea, in this case, I’m just going to borrow some words of wisdom from Billy Joel: we didn’t start the fire. The Russians did.
Of course, this doesn’t mean that people should point fingers or engage in grossly unproductive actions. However, we also do a disservice to truthful reporting if we just say that the conflict magically materialized out of thin air. Someone made an awful decision and in turn, CRWD stock has become relevant. Morally, I don’t read into it any more than that.
Sadly, the fighting has crossed the Rubicon from threats to physical posturing to now outright violence. This genie isn’t going back into the bottle anytime soon. So while it’s a painfully obvious catalyst, it’s the one that works — and will likely continue working — for CRWD stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
