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Does CrowdStrike's (CRWD) Recent Dip Make it an Attractive Buy?
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CrowdStrike (CRWD - Free Report) shares fell 3.3% to close at $246.89 on Jan 2. The dip presents a buying opportunity as CRWD is benefiting from a strong portfolio of innovative solutions that encompass endpoint security, threat intelligence and cyber-attack response domains.
In the trailing 12-month period, CrowdStrike shares have outperformed the Zacks Computer & Technology sector, as well as Zacks Internet Software peers like Fortinet (FTNT - Free Report) and Palo Alto Networks.
CRWD shares have returned a whopping 139% compared with the sector’s, Fortinet’s and Palo Alto’s growth of 53.8%, 19.1% and 108.7%, respectively.
Per the Zacks proprietary methodology, a stock with such a favorable combination offers a good investment opportunity.
Image Source: Zacks Investment Research
Let’s delve deep into the factors that make CRWD an attractive stock in 2024.
Heightened Level of Cybersecurity Spending
Spending on cybersecurity and risk management is expected to hit new highs this year, as per projections from market research firms IDC and Gartner.
IDC, in its August 2023 update, projected cybersecurity spending to increase 18% this year. In its September 2023 report, Gartner projected worldwide end-user spending on security and risk management to reach $215 billion in 2024, indicating growth of 14.3% over 2023’s estimate of $188.1 billion.
Ongoing digital transformation driven by continuing transition to cloud, hybrid work environment, rapid adoption of generative AI and increasing regulatory scrutiny are expected to drive spending, per Gartner.
Spending on cloud security and data privacy is expected to increase the most, which bodes well for CrowdStrike’s growth prospects.
Portfolio Strength Helps in Driving Prospect
CRWD’s Falcon platform has been purpose-built in the cloud to harness the power of data. It set itself apart from other players in the space by providing a single lightweight platform that detects and mitigates threats in real-time, a step up from older signature-based models.
Falcon’s 23 cloud modules boost CrowdStrike’s competitive edge and help add users. In third-quarter fiscal 2024, CrowdStrike’s subscription customers who adopted five or more cloud modules represented 63% of the total subscription customers, those with six or more cloud modules accounted for 42% and those with seven or more cloud modules represented 26%.
More importantly, deals with eight or more modules increased 78% year over year in the reported quarter. The number of public cloud customers CrowdStrike protects increased 45% year over year, reflecting market share win.
Annual Recurring Revenue (ARR) surged 35% year over year to $3.15 billion. CrowdStrike witnessed strong demand for AI native XDR platform, continued momentum in cloud security and identity businesses, as well as a robust performance from the LogScale Next-gen Security Information Event Management (SIEM) business.
CRWD added $223 million to its net new ARR in the reported quarter. LogScale surpassed $100 million in ARR.
Portfolio innovation aids growth prospects with the addition of new solutions like Falcon for IT, a module that unifies IT and SecOps. Falcon data protection module (now available generally) offers smooth data security, while Falcon Foundry, a no-code application development solution, enables both customers and technology partners to build directly on Falcon.
A diversifying end-market is expected to boost growth. CrowdStrike’s Falcon Go, launched in November last year, addresses the security requirements of small and medium businesses (SMBs), including ransomware attacks and data breaches.
Strong Partner Base, Acquisitions Aid Growth
A strong partner base that includes the likes of Optiv, Box (BOX - Free Report) and Amazon (AMZN - Free Report) has been a key catalyst.
CrowdStrike’s strategy to launch Falcon Go on Amazon Business is noteworthy. Falcon Go became the first CRWD solution available on Amazon’s business-to-business store. CRWD has become the first cybersecurity independent software vendor founded for the cloud to exceed $1 billion in software sales through AWS Marketplace.
The Box partnership involves integration between its secure content management and collaboration capabilities and CrowdStrike’s Falcon platform for real-time access control and threat prevention. This makes threat detection and monitoring easier for security and IT teams.
Meanwhile, Optiv recently surpassed the $1 billion milestone in sales of its AI-native CrowdStrike Falcon platform through the CrowdStrike Accelerate Partner Program.
CrowdStrike’s growth trajectory has also been shaped by accretive acquisitions over the years. The acquisitions of Reposify, Humio and Preempt in 2020 have enhanced its capabilities in identity-based threat prevention, access control, SIEM and external attack surface management. The pending Bionic acquisition will enable CRWD to expand toward Application Security Posture Management.
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Does CrowdStrike's (CRWD) Recent Dip Make it an Attractive Buy?
CrowdStrike (CRWD - Free Report) shares fell 3.3% to close at $246.89 on Jan 2. The dip presents a buying opportunity as CRWD is benefiting from a strong portfolio of innovative solutions that encompass endpoint security, threat intelligence and cyber-attack response domains.
In the trailing 12-month period, CrowdStrike shares have outperformed the Zacks Computer & Technology sector, as well as Zacks Internet Software peers like Fortinet (FTNT - Free Report) and Palo Alto Networks.
CRWD shares have returned a whopping 139% compared with the sector’s, Fortinet’s and Palo Alto’s growth of 53.8%, 19.1% and 108.7%, respectively.
Apart from strong fundamentals, CrowdStrike currently has a Growth Score of A and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per the Zacks proprietary methodology, a stock with such a favorable combination offers a good investment opportunity.
Image Source: Zacks Investment Research
Let’s delve deep into the factors that make CRWD an attractive stock in 2024.
Heightened Level of Cybersecurity Spending
Spending on cybersecurity and risk management is expected to hit new highs this year, as per projections from market research firms IDC and Gartner.
IDC, in its August 2023 update, projected cybersecurity spending to increase 18% this year. In its September 2023 report, Gartner projected worldwide end-user spending on security and risk management to reach $215 billion in 2024, indicating growth of 14.3% over 2023’s estimate of $188.1 billion.
Ongoing digital transformation driven by continuing transition to cloud, hybrid work environment, rapid adoption of generative AI and increasing regulatory scrutiny are expected to drive spending, per Gartner.
Spending on cloud security and data privacy is expected to increase the most, which bodes well for CrowdStrike’s growth prospects.
Portfolio Strength Helps in Driving Prospect
CRWD’s Falcon platform has been purpose-built in the cloud to harness the power of data. It set itself apart from other players in the space by providing a single lightweight platform that detects and mitigates threats in real-time, a step up from older signature-based models.
Falcon’s 23 cloud modules boost CrowdStrike’s competitive edge and help add users. In third-quarter fiscal 2024, CrowdStrike’s subscription customers who adopted five or more cloud modules represented 63% of the total subscription customers, those with six or more cloud modules accounted for 42% and those with seven or more cloud modules represented 26%.
More importantly, deals with eight or more modules increased 78% year over year in the reported quarter. The number of public cloud customers CrowdStrike protects increased 45% year over year, reflecting market share win.
Annual Recurring Revenue (ARR) surged 35% year over year to $3.15 billion. CrowdStrike witnessed strong demand for AI native XDR platform, continued momentum in cloud security and identity businesses, as well as a robust performance from the LogScale Next-gen Security Information Event Management (SIEM) business.
CRWD added $223 million to its net new ARR in the reported quarter. LogScale surpassed $100 million in ARR.
Portfolio innovation aids growth prospects with the addition of new solutions like Falcon for IT, a module that unifies IT and SecOps. Falcon data protection module (now available generally) offers smooth data security, while Falcon Foundry, a no-code application development solution, enables both customers and technology partners to build directly on Falcon.
A diversifying end-market is expected to boost growth. CrowdStrike’s Falcon Go, launched in November last year, addresses the security requirements of small and medium businesses (SMBs), including ransomware attacks and data breaches.
Strong Partner Base, Acquisitions Aid Growth
A strong partner base that includes the likes of Optiv, Box (BOX - Free Report) and Amazon (AMZN - Free Report) has been a key catalyst.
CrowdStrike’s strategy to launch Falcon Go on Amazon Business is noteworthy. Falcon Go became the first CRWD solution available on Amazon’s business-to-business store. CRWD has become the first cybersecurity independent software vendor founded for the cloud to exceed $1 billion in software sales through AWS Marketplace.
The Box partnership involves integration between its secure content management and collaboration capabilities and CrowdStrike’s Falcon platform for real-time access control and threat prevention. This makes threat detection and monitoring easier for security and IT teams.
Meanwhile, Optiv recently surpassed the $1 billion milestone in sales of its AI-native CrowdStrike Falcon platform through the CrowdStrike Accelerate Partner Program.
CrowdStrike’s growth trajectory has also been shaped by accretive acquisitions over the years. The acquisitions of Reposify, Humio and Preempt in 2020 have enhanced its capabilities in identity-based threat prevention, access control, SIEM and external attack surface management. The pending Bionic acquisition will enable CRWD to expand toward Application Security Posture Management.