Why CrowdStrike Is Set To Beat Conservative Estimates: Analyst On Vigorous Channel Checks And Stabilizing Demand

Needham analyst Alex Henderson reiterated CrowdStrike Holdings Inc CRWD with a Buy and a $170 price target.

The analyst thinks CRWD will report a solid beat, given conservative guidance and estimates, a stabilizing demand environment, and vigorous channel checks. 

Management will keep its guidance conservative as conditions, while stable, remain pressured. 

Henderson thinks the discussion of AI-driven attacks and AI-driven responses amplifies Crowd's position as one of the most robust platforms. 

He thinks CISOs confronted with board-level questions about the AI strategy and threats see Crowd as a preferred vendor. 

The emerging stability evidenced in Security software names' results is crucial to his thinking and echoed by field contact commentary. 

The guidance offered by Crowd is predicated on a continuing erosion in conditions. 

The analyst thinks this suggests a bit of upside in addition to the usual conservatism of Crowd's guidance.

CRWD is seeing incremental strength in Enterprise customers with larger lands in the pipeline. In his conversations with CRWD, they note more extensive projects in the pipeline, particularly with customers looking to consolidate LogScale/SIEM, continued in 2Q with an even more robust pipeline going into the second half. 

His checks picked up minimal changes for CRWD on the discounting and pricing side. Conversely, Microsoft Corp's MSFT E5 bundling and traction with Defender make investors anxious regarding pricing.

The analyst's 2Q checks ticked up for CRWD. Broad demand stabilization into the May and June timeframe seems to have persisted, boding well for CRWD. 

The analyst expects a differentiated AI from Crowd's Charlotte in its data, cost savings, and ROI. 

Crowd's 2Q revenue outlook of $717 million -$727 million, up by 34%-36% Y/Y, compared to Henderson's $724 million, up by 35%.

The adjusted EPS is $0.54-$0.57 compared to the consensus/Needham estimate of $0.56. 

Price Action: CRWD shares traded higher by 1.97% at $146.87 on the last check Tuesday.