CrowdStrike Wows Analysts With Execution: 'Difficult Not To Be Impressed'

Shares of Crowdstrike Holdings Inc CRWD were slipping Friday, giving back some of the strong gains they've notched since their June IPO.

The weakness has come despite the cybersecurity company's beat-and-raise second-quarter report Thursday. 

The Analysts

JMP Securities analyst Erik Suppiger reiterated a Market Outperform rating on CrowdStrike with a $90 price target.

Bank of America Merrill Lynch analyst Tal Liani reiterated a Buy rating and $103 price target.

Mizuho Securities analyst Gregg Moskowitz maintained a Buy rating and $105 price target.

JMP: CrowdStrike Is Attractively Valued

In its first full quarterly results as a public company, CrowdStrike sustained triple-digit annual recurring revenue growth thanks to accelerating new customer growth and sustained robust retention rates, Suppiger said in a note.

Gross margins exceeded the firm's estimate by 290 basis points, which helped improve operational efficiencies, the analyst said. 

The company is executing on its platform strategy, with 50% of customers buying four products are more, he said. 

"We view the company's ability to sell a broad solution as a reflection of its increasingly strategic value to customers and a validation of its significant differentiation." 

Notwithstanding the modest premium valuation, JMP believes the shares are attractively valued given the company's compelling fundamentals and its track record of sustaining triple-digit ARR growth.

See also: Analysts Weigh In On VMware Earnings, Buyout Deals

BofA: All Key Metrics Are In Right Direction

CrowdStrike is executing well, displacing endpoint providers and expanding the endpoint wallet share with customers, BofA's Liani said in a Friday note. 

All key metrics are improving, the analyst said. 

"We see consolidation of endpoint features as a major theme in security, and believe CrowdStrike is best positioned for the trend with its single-agent approach." 

BofA sees the traction with Amazon.com, Inc. AMZN's AWS and the Symantec Corporation SYMC M&A uncertainty as other key positives, with the latter opening a key displacement opportunity in the market.

Citing CrowdStrike's strong third-quarter guidance and the better-than-expected fourth-quarter expectations, BofA raised its estimates.

To reflect recent weakness across peers, BofA reduced the valuation multiple from 35 times to roughly 33 times.

Mizuho: Difficult Not To Be Impressed 

The 20% retracement in the shares over the last two weeks render CrowdStrike stock even more attractive, Mizuho analyst Moskowitz said in a Friday note. 

" ... Despite a premium valuation, we expect that strong execution should propel CRWD's stock higher," the analyst said.

While noting that CrowdStrike is a high expectation stock, Moskotwitz said he finds it difficult "not to be impressed by these results."

The Price Action

CrowdStrike shares, which have jumped over 150% from its IPO price of $34, were last seen slipping 12.76% to $75.71 at the time of publication Friday. 

Related Link: CrowdStrike Hikes IPO Price Range