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CrowdStrike Earnings: Buy CRWD for Coronavirus Cybersecurity Growth?

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CrowdStrike (CRWD - Free Report) stock has soared 70% in 2020 to crush its industry’s 30% climb. The cybersecurity firm’s growth looks poised to continue and the coronavirus-induced remote work environment has created different digital security concerns for businesses, school, and governments.   

So, the question is should investors think about buying CrowdStrike stock ahead of its upcoming first quarter fiscal 2021 earnings release, due out after the market closes on Tuesday, June 2.

The Quick Pitch

CrowdStrike is a cloud-focused cybersecurity firm that utilizes machine learning and artificial intelligence to protect endpoints. CRWD aims to protect workloads “across on-premise, virtualized, and cloud-based environments running on a variety of endpoints such as laptops, desktops, servers, virtual machines, and Internet of Things, or IoT, devices.”

CRWD is set to expand within the booming cybersecurity space as threats continue to grow in an increasingly digitalized and interconnected world. For example, one estimate from Cybersecurity Ventures predictsthat the cost of global cybercrime damages will jump from $3 trillion in 2015 all the way to $6 trillion annually by 2021.

CrowdStrike last quarter reported a smaller-than-expected adjusted loss that also marked a big improvement from the year-ago period. Meanwhile, its total fiscal 2020 revenue skyrocketed 93%. The firm also added a record 870 net new subscription customers in Q4 to end its year with roughly 5,400 customers, up 116%.  

Investors might also want to consider CrowdStrike as stay-at-home stock within a broader basket of firms from Zoom (ZM - Free Report) to Netflix (NFLX - Free Report) . And the reasoning is pretty simple: businesses can’t afford to cut back on cybersecurity, especially as millions of people work from home and normal operations are disrupted.

 

 

 

 

 

 

 

 

Other Fundamentals

CRWD went public in June 2019, and investors can see that it fell from August until November. CrowdStrike shares have bounced back since then. The stock is now up roughly 70% in 2020, which includes a 150% surge since mid-March. And CRWD shares soared 8% in morning trading Friday to around $86 a share. This gives it 15% more room to run before it reaches its 52-week highs.

Despite the recent climb, CrowdStrike’s valuation picture appears solid compared to where it has traded over the last year. CRWD is trading at 20.5X forward 12-month sales estimates, which marks a significant discount compared to its highs of 43X.  

Outlook

Moving on, our Zacks estimates call for CRWD’s first quarter revenue to jump 73% from the year-ago period to $165.94 million. Meanwhile, its adjusted loss is expected to shrink from -$0.47 to -$0.06 a share. These would both mark the continuation of strong top and bottom-line expansion.

Peeking further ahead, CrowdStrike’s full-year fiscal 2021 revenue is expected to climb another 52%. And CRWD’s adjusted fiscal year loss is expected to shrink from -$0.42 to -$0.12 per share. Better still, the company is projected to post positive adjusted earnings of +$0.14 in fiscal 2022.

Bottom Line

CrowdStrike is currently a Zacks Rank #3 (Hold) that has seen its overall earnings outlook improve over the last 90 days. CRWD also sports “A” grades for both Growth and Momentum in our Style Scores system and it's part of an industry that rests in the top 12% of our more than 250 Zacks industries. CrowdStrike has also easily topped our bottom-line estimates in the trailing three periods.

Clearly, playing stocks for near-term gains around earnings is risky, even for stocks that appear set to grow during the coronavirus economic downturn. That said, longer-term investors might want to consider CrowdStrike for its ability to grow within an industry that will only grow in importance.

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