Crowdstrike (NASDAQ:CRWD) was already favored among Wall Street’s analysts prior to the recent release of its Q2 financial results. Yet, Crowdstrike’s quarterly performance should give CRWD stock a major boost in the coming days, and I’m bullish on the stock for the rest of 2023.
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Texas-based Crowdstrike is a cloud-based cybersecurity service provider. CRWD stock rallied this year through May but then stalled out during the summer.
I expected a huge move to occur (and so did the options market, judging by call and put prices) after Crowdstrike disclosed its second-quarter Fiscal Year (FY) 2024 earnings results. As it turned out, the stock was slightly red and then slightly green but really didn’t move much in after-hours trading. Could a bigger, delayed reaction occur in the near future? It wouldn’t surprise me, and I’m preparing for CRWD stock to make a bigger move to the upside soon.
A Surprising Downgrade and a Spot-on Prediction for Crowdstrike
Since Crowdstrike is a premier player in the cybersecurity software niche, prominent analysts released their predictions prior to the company’s Q2-FY2023 financial report. As we’ll discuss in a few moments, the analyst community was already quite bullish on CRWD stock even before the company announced its positive quarterly results.
Yet, not every expert on Wall Street was bullish on Crowdstrike. It stunned me to learn that Morgan Stanley (NYSE:MS) analysts had downgraded Crowdstrike stock from Overweight (which is like a Buy rating) to Equal Weight (which is similar to a Neutral rating) and had also reduced their price target on the shares from $178 to $167.
Apparently, the Morgan Stanley analysts were cautious prior to Crowdstrike’s second-quarter earnings release and felt that consensus estimates for a second half of 2023 and 2024 rebound “appear high in light of a more difficult demand environment.”
In stark contrast to this, Needham analyst Alex Henderson predicted that Crowdstrike would report a “solid beat” for the quarter. According the TheFly, Henderson cited conservative guidance and estimates, a stabilizing demand environment, and Crowdstrike’s strong channel checks. So, did Henderson’s call for a “solid beat” pan out?
Crowdstrike Defeats the Skeptics with Another Earnings Beat
The stakes were high in Q2 FY2023, as Crowdstrike’s stellar track record of EPS beats hung in the balance now. As it turned out, though, Crowdstrike delivered another easy beat, along with impressive top-line results.
It stunned me that CRWD stock didn’t jump 5% or 10% in after-hours trading since Crowdstrike’s total revenue grew 37% year-over-year to $731.6 million during the quarter. Another top-line measure, Crowdstrike’s annual recurring revenue (ARR), also happened to increase 37% year-over-year and reached $2.93 billion.
Given those results, I wonder whether the Morgan Stanley analysts will readjust their rating and price target for CRWD stock. That’s not the only good news, though, as Crowdstrike also posted quarterly earnings of $0.74 per share, showing a remarkable improvement over the company’s year-earlier quarter EPS of $0.36. Analysts expected Crowdstrike to report earnings of $0.56 per share, so again, Henderson’s “solid beat” forecast turned out to be spot-on.
Is CRWD Stock a Buy, According to Analysts?
On TipRanks, CRWD comes in as a Strong Buy based on 26 Buys and three Hold ratings assigned by analysts in the past three months. The average Crowdstrike price target is $180.07, implying 20.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell CRWD stock, the most accurate analyst covering the stock (on a one-year timeframe) is Tal Liani of Bank of America (NYSE:BAC) Securities, with an average return of 48.75% per rating and a 65% success rate. Click on the image below to learn more.
Conclusion: Should You Consider CRWD Stock?
Crowdstrike didn’t move much in after-hours trading and was actually in the red for a while. This is counterintuitive and possibly irrational, given Crowdstrike’s strong top- and bottom-line results and amazing track record of EPS beats.
Traders have been waiting for CRWD stock to finally break out of its range and move above $160. It wouldn’t surprise me if this happens soon, and I feel that investors should take a close look at Crowdstrike. As they say, the numbers don’t lie – and when the market eventually realizes Crowdstrike’s full value, early shareholders could enjoy a well-deserved windfall.
