CrowdStrike Stock Is Ripping Higher Tuesday: Here's Why

CrowdStrike Holdings Inc CRWD shares are trading higher Tuesday on the back of an upgrade from Morgan Stanley.

Analyst Take: Morgan Stanley analyst Hamza Fodderwala upgraded CrowdStrike from an Equal-Weight rating to an Overweight rating and raised the price target from $203 to $304, citing improving demand, platform traction and upcoming AI product cycles.

The Morgan Stanley analyst expects increased demand and traction to help drive more meaningful upside to annual recurring revenue and free cash flow forecasts in 2024.

Despite CrowdStrike’s significant outperformance over the last year, with shares rallying more than 185%, Fodderwala expects the aforementioned catalysts to drive the stock higher over the course of the year.

“Bottom line, Hamza thinks traction with new products, GenAl tailwinds, easier comps, and improving overall demand sets up positively for ARR and FCF growth in 2024/25,” the analyst firm said.

Morgan Stanley’s new price target of $304 assumes a EV/FCF multiple of 45. Fodderwala noted that CrowdStrike is currently trading with a multiple of 38, which is a “slight discount” to SaaS/cybersecurity peers.

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Is CRWD A Buy? When deciding whether to buy a stock, there are some key fundamentals investors may want to consider. One of these factors is revenue growth. Buying a stock is essentially a bet that the business will continue to grow and generate profits in the future.

CrowdStrike has reported average annual revenue growth of 74.58% over the past 5 years. Looking forward, the company most recently said it expects FY24 revenues of $3.04B.

It's also important to pay attention to valuation when deciding whether to buy a stock. CrowdStrike Holdings has a forward P/E ratio of 71.43. This means investors are paying $71.43 for each dollar of expected earnings in the future. The average forward P/E ratio of CrowdStrike’s peers is 58.64.

Other important metrics to look at include a company's profitability, balance sheet, performance relative to a benchmark index and valuation compared to peers. For in-depth analysis tools and important financial data, check out Benzinga PRO

CRWD Price Action: CrowdStrike shares were up 5.15% at $274.85 at the time of publication, according to Benzinga Pro.

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