What Crowdstrike Analysts Are Saying After Q1 Beat: 'A Unique Investment Vehicle'

Cybersecurity company Crowdstrike Holdings Inc CRWD reported first-quarter results Tuesday highlighted by an 89% year-over-year subscription growth, $686 million in annual recurring revenue and improving free cash flow from negative $16.1 million last year to positive $87 million.

Here's how some of the Street's top analysts reacted to the report.

The Crowdstrike Analysts

Needham analyst Alex Henderson maintains at Buy, price target lifted from $105 to $120.

Oppenheimer analyst Shaul Eyal maintains at Outperform, price target lifted from $85 to $110.

Credit Suisse analyst Brad Zelnick maintains at Neutral, price target lifted from $65 to $80.

Tigress Financial Partners CIO Ivan Feinseth commented on Crowdstrike in his daily newsletter. 

Needham Sees Across-The-Board Strength In Crowdstrike 

Crowdstrike's go-to-market and highly scalable installation capabilities "shined" in the current "COVID constrained environment," Henderson said in a Wednesday note.

This is supported by strength seen nearly across the board in the quarter, the analyst said:

• 105% growth in new customers.
• Revenue growth of 85% versus 73% on the high end of management's guidance.
• Gross margins up 500 basis points to 77%.
• Operating margins improved 2,300 basis points year-over-year.
• ARR came in $40 million better than expected.
• Billings of $243 million beat expectations of $184 million.

"While a period of consolidation is possible, we think CRWD is a unique investment vehicle with exceptional long-term value potential," the analyst said. 

Related Link: CrowdStrike Reports Q1 Earnings Beat

Crowdstrike's Growth Outlook 'Undervalued,' Oppenheimer Says

Crowdstrike reported a strong start to fiscal 2021, showing how it continues to win market share from legacy and even next-generation vendors, Eyal said in a  ednesdaynote.

The company is also benefiting from the work-from-anywhere trend, which is "the new normal," the analyst said. 

Looking forward, the company has three "undervalued" catalysts to support the case for total addressable market growth, according to Oppenheimer. They are:

The partnership with AWS is "bearing fruit," with a 75% year-over-year increase in ARR.

Demand is only starting to ramp for IT ops and security automation use cases. The company generates $3.73 of subscription ARR for every $1 spent on incident response requests, up from a previous $2.97.

Credit Suisse's Valuation Concerns For Crowdstrike 

Crowdstrike's "exceptionally strong" earnings report came in well ahead of bull expectations and management's own internal outlook, Zelnick said in a Tuesday note. Crowdstrike's guidance was lifted by 5% at the midpoint and is likely still conservative, the analyst said. 

Valuation concerns prevent a bullish rating, he said. 

The research firm revised its fiscal 2021 revenue and non-GAAP EPS estimates from $724 million and negative 13 cents to $763 million and negative 7 cents. The revised $80 price target is based on 18.8 times EV/CY21 revenue.

Tigress On Crowdstrike's First Profitable Quarter 

Crowdstrike's report marks its first quarterly profit since inception due to the strong adoption of the cloud-native platform Falcon, Feinseth said.

The company is well-positioned to continue benefiting from increased demand for security at all levels, the analyst said. 

"The increasing demand for network security driven by both increasing trends in distributed computing and a dispersed workforce will continue to drive further growth," he said. 

"I believe further upside exists from current levels and continue to recommend purchase along with Akamai Technologies, Inc. AKAM as well."

CRWD Price Action

Shares of Crowdstrike Holdings were trading higher by 5.79% at $97.59 at the time of publication Wednesday.

Related Link:

31 Stocks Moving in Wednesday's Pre-Market Session