CrowdStrike proves it's a software standout as stock soars after earnings

By Emily Bary

CrowdStrike 'exuded confidence' beyond just its financials, an analyst said

Software stocks have struggled to find their footing this year, but not CrowdStrike Holdings Inc.

CrowdStrike shares (CRWD) were up 20% over the course of 2024 heading into Tuesday's afternoon's earnings report, and they were up another 11% in Wednesday's premarket action. The company's ability to remain a bright spot in the choppy software sector comes down to a mix of tangibles and intangibles, analysts say.

See more: CrowdStrike's strong stock rally set to sustain following upbeat earnings

For one, the cybersecurity company continues to post strong growth, with revenue up 33% from a year earlier.

CrowdStrike's results "have been impressively consistent & contrast [against] many cyber vendors with the [return on investment] of its broadening security platform becoming more evident," Jefferies analyst Joseph Gallo wrote, as he kept a buy rating and $400 target price on the stock.

Evercore ISI analyst Peter Levine was encouraged as well. "Given the mixed cyber results over the past couple of weeks, this report was the sigh of relief we were all hoping for to buck the trend, and hopefully, provide some reassurance that cyber has the legs to weather the storm," he wrote.

CrowdStrike's numbers "continue to demonstrate consistent execution and commentary from [management] reflects that that demand remains durable," he added, while sticking with his outperform call and $405 target.

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Wedbush analyst Taz Koujalgi also encouraged investors to look at CrowdStrike's results through a wide lens.

"When we compare the momentum in the quarter with last quarter, it appears momentum was a bit more modest," he wrote. "But, against the backdrop of macro/demand trends being challenging and mixed results from other software/security companies this earnings season, [CrowdStrike] delivered a clean' beat and raise" relative to its guidance and analyst expectations.

He has an outperform rating on the stock, thought his cut his price target to $385 from $390, a move that he said reflects lower stock multiples for peers.

Needham analyst Alex Henderson said his optimism about CrowdStrike stems from factors beyond just the financials.

"Sometimes the tone of management is more important than the detail in the numbers," he wrote. "In an environment marred by numerous software and security companies struggling to sustain their numbers," CrowdStrike "exuded confidence."

He has a buy rating and $425 target price on CrowdStrike's stock.

-Emily Bary

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06-05-24 0846ET

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