Shares of CrowdStrike Holdings (NASDAQ: CRWD) popped on Wednesday by as much as 21% in after-hours trading as the company managed to produce earnings well above estimates. What’s more, CrowdStrike stock produced these earnings while its peers faltered all around.
So, let’s take a look at why the company saw such an improvement. And whether the growth is now priced in or if investors can still get in on the action.
What happened?
CrowdStrike stock reported not only earnings that beat out estimates for the quarter, but provided an upbeat forecast as well. Revenue and earnings per share (EPS) for the first quarter beat estimates, climbing to US$0.95 EPS and US$845 million in the quarter.
The company also raised its full-year revenue and earnings guidance. Full revenue revenue should increase by 36%. First-quarter revenue guidance should reach between US$902 and US$905 million, well above expectations. Further, the first-quarter earnings guidance should reach between US$89 and US$90 per share.
But there was more. CrowdStrike stock also announced the acquisition of Flow Security for a cash-and-stock deal. The security company now has the goal of achieving US$10 billion in annual recurring revenue by 2030. With the stock currently at US$3.4 billion, that means making enormous growth.
Standout performance
On its own, this quarter was phenomenal of course. But it was even more impressive given that other security companies were seriously struggling. The cybersecurity sector was experiencing a negative outlook in the recent past. This could be from lower-than-expected performances as well as market concerns and economic factors.
For instance, Palo Alto Networks (NASDAQ: PANW) saw shares drop by 3.34% in mid-February after providing a downbeat outlook. Further, Zscaler (NASDAQ: ZS) also received a poor stock reaction, which contributed to this overall rough outlook for the sector.
And yet, it was a positive contrast for CrowdStrike stock, showing that there is still room to grow in the cybersecurity sector. The stock now looks like a strong one to consider and potentially is less risky with a higher chance of success compared to its peers.
What analysts are saying
Analysts even before the earnings report held CrowdStrike stock as a “Strong Buy.” What’s more, there are absolutely no “Sell” ratings to be found. Now, the average price target remains at US$332.74. This means that CrowdStrike has grown beyond that point at US$345 as of writing.
That being said, as mentioned, this is before analysts have weighed in on earnings. This is certainly going to be priced in. And what’s more, given the acquisition and strong performance, I would say that the company doesn’t look overvalued at this point.
As a market leader in cybersecurity with upbeat future guidance and strong growth potential, it then looks like a strong contender for your watchlist. Even as shares climb higher, I wouldn’t necessarily believe that it’s going to suddenly drop — especially with that 2030 guidance ahead of it.
While I would wait for the dust to settle after earnings, CrowdStrike stock certainly still looks like a strong stock to buy. And what’s more, it’s one to hold until 2030, if not beyond.
