KeyBanc raises CrowdStrike stock price target to $480

On Tuesday, KeyBanc Capital Markets adjusted its outlook on CrowdStrike Holdings (NASDAQ:CRWD) stock, increasing its price target to $480 from the previous $395. The firm maintained its Overweight rating on the cybersecurity company’s shares. With a current market capitalization of $105.65 billion and trading near its 52-week high of $431.90, InvestingPro analysis indicates the stock is currently trading above its Fair Value. The adjustment follows a series of positive checks for the fourth fiscal quarter, suggesting that expectations are high for the company’s performance.

Eric Heath, an analyst at KeyBanc, reported solid interactions with channel partners, noting that all partners they spoke to were meeting or exceeding their plans. This aligns with CrowdStrike’s impressive revenue growth of 31.35% and industry-leading gross profit margin of 75.24%, according to InvestingPro data. Although there were some instances of deal delays, attributed to complexities in Falcon Flex (NASDAQ:FLEX) deals and customer approval processes, the overall feedback from partners remained consistent over the past seven months. Notably, there has been little to no churn from CrowdStrike’s Falcon platform.

Despite the positive channel checks, the analyst expressed a degree of caution ahead of CrowdStrike’s earnings report. This caution stems from the company’s strong year-to-date return, which stands at +23%, compared to the IGV’s +6%. Another point of concern is CrowdStrike’s exposure to federal spending, which could represent a significant portion of the company’s revenue.

Heath highlighted the minimal customer migration away from CrowdStrike, with only a few instances where clients switched to competitors like SentinelOne (NYSE:S). On a more positive note, one partner mentioned an organization choosing CrowdStrike after a service outage, influenced by the fact that their peers were using the company’s services.

KeyBanc remains optimistic about CrowdStrike’s potential to expand into new market areas such as Security Information and Event Management (SIEM), identity, Cloud Native Application Protection Platform (CNAPP), data security, and other adjacent markets. The firm also anticipates a possible reacceleration in Annual Recurring Revenue (ARR) after the company moves past the impact of the July 19 outage. InvestingPro subscribers can access 15+ additional investment tips and a comprehensive Pro Research Report for deeper insights into CrowdStrike’s growth trajectory and financial health, which currently rates as GOOD on InvestingPro’s proprietary scoring system.

In other recent news, CrowdStrike Holdings has been the subject of various analyst reviews. Baird analysts downgraded the cybersecurity firm’s stock from Outperform to Neutral but raised the price target to $430, citing the company’s current market valuation. Meanwhile, JMP Securities maintained its Market Outperform rating on CrowdStrike with a steady price target of $400, highlighting robust sales performance indicators. Truist Securities increased its price target for the company to $385, reaffirming a Buy rating. RBC Capital Markets raised its price target to $420 while maintaining an Outperform rating, citing new module traction and cloud security growth.

In other developments, CrowdStrike’s Falcon platform achieved a perfect score in the 2024 SE Labs Enterprise Advanced Security Ransomware Test, detecting and protecting against all tested ransomware threats. The platform’s successful performance was attributed to its AI-driven detection and response capabilities and its cloud-native architecture.

These recent developments underscore CrowdStrike’s resilient performance and its positioning as a leading vendor in the cybersecurity sector. The company’s ability to navigate market conditions and continue its growth trajectory, as well as its effective land-and-expand business model, have been noted by analysts. However, caution has been advised due to the company’s elevated valuation.

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