uploads/2020/06/cloudstrike-upcoming-earnings.jpg

Is CrowdStrike a ‘Buy’ before Its Q1 Earnings Results?

By

Updated

On May 29, CrowdStrike Holdings (NASDAQ:CRWD) stock rose 10.5% and closed at $87.81. The stock was trading 13.8% below its 52-week high of $101.88. Meanwhile, the stock was trading 174.8% above its 52-week low of $31.95. At the closing price on May 29, CrowdStrike’s stock had a market cap of $18.9 billion.

What can investors expect from CrowdStrike’s results for the first quarter of fiscal 2021? The cybersecurity technology company will likely post its financial results on Tuesday after the market close. Notably, the first quarter ended on April 30.

Article continues below advertisement

CrowdStrike’s Q1 earnings expectations

Wall Street analysts expect CrowdStrike to post sales of $165.4 million in the first quarter—a growth of 72.2% YoY (year-over-year) compared to $96.1 million in the first quarter of fiscal 2020. Also, analysts expect the company to post non-GAAP EPS of -$0.06 in the first quarter compared to -$0.47 in the first quarter of 2020.

Analysts expect CrowdStrike’s revenues to rise 51.1% YoY in fiscal 2021 to $727.5 million. The sales could rise by 30% YoY in fiscal 2022 to $944.6 million. Meanwhile, the EPS will likely rise from -$0.42 in fiscal 2020 to -$0.12 in fiscal 2021. Analysts also expect an EPS of $0.17 in fiscal 2022.

Analysts’ recommendations for CrowdStrike

Among the 21 analysts following CrowdStrike stock, 16 recommend a “buy,” four recommend a “hold,” and one recommends a “sell.” Wall Street analysts’ mean target price on the stock is $81.41, which implies a 7.2% loss from the current level of $87.81. The consensus target price for the stock has risen from $73.32 a month earlier—a growth of 11.0%.

Many analysts increased their target price for CrowdStrike stock before the first-quarter results. Needham increased its target price from $92 to $105, while D.A. Davidson increased its target price from $60 to $105.

Article continues below advertisement

RBC Capital analyst Matthew Hedberg also increased its target price on CrowdStrike stock from $73 to $90 with an “outperform” rating. According to a report from TheFly, “The analyst expects the company to deliver a strong quarter on robust customer adds and continued application expansion, noting that Crowdstrike remains well positioned to consolidate security spending beyond legacy AV solutions.” The report added, “The company should be a near- and long-term beneficiary of additional work-from-home trends.”

Peer comparison

In the third quarter of fiscal 2020, which ended in April, Zscaler (NASDAQ:ZS) delivered revenue of $110.52 million—an increase of 39.7% YoY. Wall Street expected revenue of $106.4 million. The company posted an adjusted EPS of $0.07, which beat the consensus estimate of $0.02. Read Zscaler Jumps 20% Due to Good News in Its Q3 Results to learn more.

Also in the third quarter of fiscal 2020, Palo Alto Networks (NYSE:PANW) delivered revenue of $869.4 million—an increase of 19.7% YoY. Wall Street expected revenue of $831.1 million. The company posted an adjusted EPS of $1.17, which beat the consensus estimate of $0.94. Read Is Palo Alto Networks a Smart Long-Term Buy? to learn more.

Technical analysis

Based on the closing price on May 29, CrowdStrike stock was trading 13.7% above its 20-day moving average of $77.26. The stock is also trading 30.2% above its 50-day moving average of $67.43 and 40.9% above its 100-day moving average of $62.31. CrowdStrike’s 14-day relative strength index score is 74. The score indicates that the stock is overbought.

CrowdStrike stock has a middle Bollinger Band level of $77.26, while its lower Bollinger Band level is $69.32. On May 29, CrowdStrike stock closed near its upper Bollinger Band level of $85.19, which suggests that it’s overbought.

On May 29, the S&P 500 and the Dow Jones Industrial Average returned 0.48% and -0.07%, respectively. Read Should US Stock Market Crash Proponents Admit Defeat? to learn more.

Stay tuned to learn how CrowdStrike performed in the first quarter.

Advertisement

More From Market Realist