Preview: What To Expect From CrowdStrike’s Q4 Earnings

The cloud-based security software company CrowdStrike is expected to deliver a loss of $16 cents per share in the fourth quarter, worse compared to a loss of $8 cents per share registered in the same period a year ago.

However, the Sunnyvale, California-based technology firm would post revenue growth of over 55% to $412.3 million. The company forecasts revenues in the range of $406.5 million-$412.3 million for the period ended January 31, 2022. The company has beaten earnings estimates only once in the last four quarters.

“We believe CrowdStrike remains strongly positioned to take advantage of the shift toward cloud-based security solutions from legacy vendors, a heightened threat environment requiring professional assistance, the adoption of zero-trust architecture, and organizations looking for platform-based security solutions,” noted Mark Cash, Senior Equity Analyst at Morningstar.

CrowdStrike stock closed 6.3% lower at $179.01 on Friday. The stock plunged more than 12% so far this year after falling over 3% in 2021.

Analyst Comments

“Arising overall security demand has driven higher expectations for CrowdStrike (CRWD). However, we see risk to investor expectations in Q4 as growth in customer adds is unlikely to outpace a declining average deal size by wide enough margin, resulting in more limited upside to consensus ARR forecasts,” noted Hamza Fodderwala, equity analyst at Morgan Stanley.

CrowdStrike has quickly risen to market leadership as a next-gen SaaS security platform with rapid share gains driving 95% revenue CAGR over the last 3 years. However, growing signs of increased competitive & pricing pressure is likely to make share gains more difficult going forward as topline growth decelerates on tough compares into 2022. Given this dynamic, we see an unfavourable risk-reward.”

CrowdStrike Stock Price Forecast

Sixteen analysts who offered stock ratings for CrowdStrike in the last three months forecast the average price in 12 months of $258.69 with a high forecast of $340.00 and a low forecast of $180.00.

The average price target represents a 44.50% change from the last price of $179.03. Of those 16 analysts, 15 rated “Buy”, none rated “Hold”, while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $180 with a high of $249 under a bull scenario and $123 under the worst-case scenario. The investment bank gave an “Underweight” rating on the cybersecurity technology company’s stock.

Several analysts have also updated their stock outlook. Stifel cut the price objective to $250 from $285. RBC lowered the target price to $250 from $275. Mizuho slashed the target price to $270 from $310. Truist Securities lowered the target price to $275 from $300.

“Fundamentals & a robust environment should drive both prints. CRWD should exceed F4Q cons ARR growth of 60% (Jeff 61%), & we believe low 60s%+ is the true bogey,” noted Brent Thill, equity analyst at Jefferies.

SentinelOne (S) should exceed cons in its 3rd Q as a public company sustaining at least 120%+ ARR growth vs cons. 116% yoy. While both warrant premium valuation, we view CRWD as more attractive given its scale & 28% discount to S (S does screen better on a growth adjusted basis but is not yet profitable).”

However, technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator shows a strong selling opportunity.

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