Needham raises CrowdStrike stock PT following strong execution in third quarter

EditorRachael Rajan
Published 27/11/2024, 14:52
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On Wednesday, Needham maintained its positive stance on CrowdStrike Holdings (NASDAQ:CRWD), increasing its price target to $420.00, up from the previous $360.00, while keeping a Buy rating on the shares. The firm's decision follows CrowdStrike's performance in the third quarter of the fiscal year 2025, where the company outperformed all guided metrics.

CrowdStrike's latest financial results showed strong execution, with the company turning challenges into opportunities. Despite a minimal quarter-over-quarter decrease in Gross Retention, down less than 0.5%, the results were seen as a validation of the management's strategy. The firm also noted CrowdStrike's success in securing a significant number of multi-year deals, as indicated by the $500 million quarter-over-quarter increase in Remaining Performance Obligations (RPO).

The cybersecurity firm's efforts in helping customers consolidate to the Falcon Platform were highlighted as a key factor in its success. Additionally, the trend towards multi-module adoption was noted to likely increase customer retention, making it more difficult for clients to replace CrowdStrike's services.

"Despite these positives, we believe management is appropriate in its tone that the company is navigating with reduced visibility; with a reiterated view of ARR and Subscription headwinds in 4QFY25 and maintained outlook for 2HFY26 ARR reacceleration," the analysts added.

In other recent news, analyst firms, Citi, Baird, and Susquehanna, have raised their price targets for CrowdStrike to $400, $390, and $400 respectively. Scotiabank (TSX:BNS), however, maintained a cautious stance, keeping its Sector Perform rating.

Despite challenges such as a service disruption in July and customer churn concerns, CrowdStrike's broader platform adoption, driven by the Falcon Flex (NASDAQ:FLEX) offering, is expected to contribute to the company's ongoing success. The company aims to accelerate net new ARR in the second half of fiscal year 2026 and has set a goal to reach $10 billion in ARR by fiscal year 2031.

InvestingPro Insights

CrowdStrike's strong performance and Needham's optimistic outlook are further supported by recent data from InvestingPro. The company's revenue growth remains robust, with a 33.07% increase in the last twelve months as of Q2 2025, aligning with the firm's successful execution noted in the article. This growth is complemented by a healthy gross profit margin of 75.37%, underscoring CrowdStrike's ability to maintain profitability while expanding.

InvestingPro Tips highlight that CrowdStrike is expected to be profitable this year, which corroborates the positive sentiment expressed by Needham. Additionally, the company's strong return over the last year, with a 73.42% price total return, reflects investor confidence in CrowdStrike's strategy and market position.

It's worth noting that CrowdStrike is trading at high valuation multiples, including a P/E ratio of 515.09. This premium valuation suggests that investors have high expectations for future growth, in line with the anticipated reacceleration in ARR mentioned in the article.

For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for CrowdStrike, providing deeper insights into the company's financial health and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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