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Buy CrowdStrike (CRWD) Stock at Highs as Long-Term Cybersecurity Bet?
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Cybersecurity and technological advancement go hand in hand as the world moves all of its most valuable information, data, and more into the digital realm. The coronavirus remote-work and school push has spurred the technological transformation even further. This has helped send the Nasdaq and tech stocks to new highs.
One of the beneficiaries is CrowdStrike (CRWD - Free Report) . The cloud-focused cybersecurity firm jumped to new highs on Friday ahead of its upcoming second quarter earnings release that’s due out on Wednesday, September 2.
Join the CRWD…
CrowdStrike is a cloud-focused cybersecurity firm that utilizes machine learning and artificial intelligence to protect endpoints. This is vital in an age of rapid endpoint expansion, which includes laptops, desktops, smartphones, IoT devices, and more.
The proliferation of connected devices, big and small, is only going to contiue in an age where smart cities and self-driving cars are no longer the stuff of science fiction. Along with this growth comes cybercrime, which Cybersecurity Ventures predicts will double in cost from $3 trillion in 2015 to $6 trillion annually by 2021.
The company’s first quarter FY21 revenue jumped 85% to $178.1 million, which marked its fifth straight quarter of 85% or stronger revenue growth. Meanwhile, it swung from an adjusted loss of -$0.47 a share in the year-ago period to +$0.02. This helped it blow away our bottom-line estimate. More importantly, it marked CrowdStrike’s first quarter of non-GAAP operating profitability.
Investors should also note that CrowdStrike’s total subscription customers soared 105% to 6,261 for the period ended on April 30. “An increasing number of organizations recognize the power of CrowdStrike’s cloud-native Falcon platform to effectively stop breaches as well as simplify their security and I.T. operations stack with a single, lightweight agent,” CEO George Kurtz said in prepared Q1 remarks.
“Cybersecurity is mission critical and in the quarter our customers continued to prioritize their cybersecurity investments. With both security administrators and end-users working from home, we believe the rapid shift to a remote workforce has helped increase our leadership.”
What’s Next…
CRWD went public last June and struggled for some time after finding early success. However, the nearby chart showcases how far CrowdStrike has climbed in 2020, up 140% overall.
The stock has also outpaced some coronavirus standouts such as Zoom Video (ZM - Free Report) and Shopify (SHOP - Free Report) since mid-March, with CRWD up 260% from around $35 per share to its new highs Friday of around $120. This run includes a 20% jump in the past several weeks.
The recent positivity could mean that Wall Street is expecting big things from CrowdStrike’s upcoming results. And it certainly highlights the continued love affair with tech and other stocks that can thrive during the pandemic.
Despite sitting at new highs, CrowdStrike’s valuation picture has improved significantly. CRWD trades at 26.7X forward 12-month sales, which marks a significant discount compared to its one-year highs of 36.3X and Zoom’s 40.4X. Investors should also note that the company greatly improved its cash position during the first quarter to help beef up its balance sheet.
Looking ahead, Zacks estimates call for CRWD’s second quarter sales to jump 75% to $188.6 million. Meanwhile, its adjusted loss is projected to shrink from -$0.18 to -$0.01 per share.
Bottom Line
CrowdStrike holds a Zacks Rank #3 (Hold) at the moment, alongside its “A” grade for Growth in our Style Scores system. On top of that, its longer-term earnings outlook is trending in the right direction and its top-line expansion is expected to continue, with its fiscal year revenue projected to jump 60%.
The prudent near-term play is likely to hold off on possibly buying CRWD until after it reports and provides updated guidance. Yet even if there is a post-earnings pullback, investors might want to consider CrowdStrike as a remote-work play and a longer-term bet on the cybersecurity industry.
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This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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Buy CrowdStrike (CRWD) Stock at Highs as Long-Term Cybersecurity Bet?
Cybersecurity and technological advancement go hand in hand as the world moves all of its most valuable information, data, and more into the digital realm. The coronavirus remote-work and school push has spurred the technological transformation even further. This has helped send the Nasdaq and tech stocks to new highs.
One of the beneficiaries is CrowdStrike (CRWD - Free Report) . The cloud-focused cybersecurity firm jumped to new highs on Friday ahead of its upcoming second quarter earnings release that’s due out on Wednesday, September 2.
Join the CRWD…
CrowdStrike is a cloud-focused cybersecurity firm that utilizes machine learning and artificial intelligence to protect endpoints. This is vital in an age of rapid endpoint expansion, which includes laptops, desktops, smartphones, IoT devices, and more.
The proliferation of connected devices, big and small, is only going to contiue in an age where smart cities and self-driving cars are no longer the stuff of science fiction. Along with this growth comes cybercrime, which Cybersecurity Ventures predicts will double in cost from $3 trillion in 2015 to $6 trillion annually by 2021.
The company’s first quarter FY21 revenue jumped 85% to $178.1 million, which marked its fifth straight quarter of 85% or stronger revenue growth. Meanwhile, it swung from an adjusted loss of -$0.47 a share in the year-ago period to +$0.02. This helped it blow away our bottom-line estimate. More importantly, it marked CrowdStrike’s first quarter of non-GAAP operating profitability.
Investors should also note that CrowdStrike’s total subscription customers soared 105% to 6,261 for the period ended on April 30. “An increasing number of organizations recognize the power of CrowdStrike’s cloud-native Falcon platform to effectively stop breaches as well as simplify their security and I.T. operations stack with a single, lightweight agent,” CEO George Kurtz said in prepared Q1 remarks.
“Cybersecurity is mission critical and in the quarter our customers continued to prioritize their cybersecurity investments. With both security administrators and end-users working from home, we believe the rapid shift to a remote workforce has helped increase our leadership.”
What’s Next…
CRWD went public last June and struggled for some time after finding early success. However, the nearby chart showcases how far CrowdStrike has climbed in 2020, up 140% overall.
The stock has also outpaced some coronavirus standouts such as Zoom Video (ZM - Free Report) and Shopify (SHOP - Free Report) since mid-March, with CRWD up 260% from around $35 per share to its new highs Friday of around $120. This run includes a 20% jump in the past several weeks.
The recent positivity could mean that Wall Street is expecting big things from CrowdStrike’s upcoming results. And it certainly highlights the continued love affair with tech and other stocks that can thrive during the pandemic.
Despite sitting at new highs, CrowdStrike’s valuation picture has improved significantly. CRWD trades at 26.7X forward 12-month sales, which marks a significant discount compared to its one-year highs of 36.3X and Zoom’s 40.4X. Investors should also note that the company greatly improved its cash position during the first quarter to help beef up its balance sheet.
Looking ahead, Zacks estimates call for CRWD’s second quarter sales to jump 75% to $188.6 million. Meanwhile, its adjusted loss is projected to shrink from -$0.18 to -$0.01 per share.
Bottom Line
CrowdStrike holds a Zacks Rank #3 (Hold) at the moment, alongside its “A” grade for Growth in our Style Scores system. On top of that, its longer-term earnings outlook is trending in the right direction and its top-line expansion is expected to continue, with its fiscal year revenue projected to jump 60%.
The prudent near-term play is likely to hold off on possibly buying CRWD until after it reports and provides updated guidance. Yet even if there is a post-earnings pullback, investors might want to consider CrowdStrike as a remote-work play and a longer-term bet on the cybersecurity industry.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>