CrowdStrike (CRWD) shares soared in early Wednesday trading as analysts rushed to revamp their ratings and price targets on the cybersecurity group after it reported stronger-than-expected fourth quarter earnings.
CrowdStrike's earnings, posted late Tuesday, were set to provide a key insight into the cybersecurity space following disappointing updates from rivals Palo Alto Networks (PANW) and Zscaler (ZS) over the past two weeks.
Palo Alto Networks, in fact, had cautioned that companies were indicating a certain level of "fatigue" about cybersecurity spending, even as the threat of attack, powered in part by advances in AI technologies, accelerates.
FBI Director Chris Wray told Congress last month that China-based hackers, connected to the government in Beijing, have been targeting critical infrastructure in the U.S. in order to "wreak havoc and cause real-world harm to American citizens and communities."
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Cybersecurity Ventures, a research group, has estimated the cyberattacks ripped out around $8 trillion from the global economy last year, and it expects that figure to rise to $10.5 billion by 2025.
CrowdStrike: AI elevates cybersecurity threat levels
"The state of the threat landscape has never been more elevated," CrowdStrike CEO George Kurtz told investors on a conference call late Tuesday. "What took adversaries hours has shrunk to minutes and seconds. Attack speeds will only accelerate."
"The cloud is today's battleground for cyberattacks," he added. "[Generative] AI puts advanced cybercrime tradecraft in the hands of attackers of all skill levels (and) will dramatically grow the adversary population."
Against that backdrop, CrowdStrike sees 2024 revenue rising firmly into next year, with a top-line increase of around 78.5%, taking it to between $3.92 billion and $3.97 billion.
CrowdStrike also said adjusted earnings would improve to between $3.77 and $3.97 a share, with the midpoint firmly ahead of the LSEG forecast of $3.80 a share, as gross margins hover around 78%.
Related: Analysts race for new Palo Alto Networks price targets as shares plunge
The group also unveiled the acquisition of Flow Security, an Israel-based startup specializing in cloud-data security that will bolt on to CrowdStrike's broader product offering.
However, its robust forecast, particularly against the muted outlooks from Palo Alto Networks and Zscaler, is what's trigged a series of big price-target resets on Wall Street as analysts scramble to adjust to the stock's early Wednesday surge.
"CrowdStrike has clear momentum heading into FY25, benefiting from platform trends, larger multiproduct enterprise deals, and brand recognition/dominance in a number of essential security categories," said JMP Securities analyst Trevor Walsh.
Walsh, who lifted his CrowdStrike price target by $70 to $400 a share following last night's earnings report, carries an outperform rating on the stock.
CrowdStrike maintains market leadership
KeyBanc Capital Markets analyst Eric Heath, meanwhile added $55 to his CrowdStrike price target, taking it to $430 a share. He cited the group's status as a "leading platform vendor" in the cybersecurity space as well as "our view of a steady-to-improving security demand environment this year."
That view is shared by Third Bridge analyst Jordan Berger, who also considers CrowdStrike a "leader in the market" for premium cybersecurity offerings.
“Despite recent concerns around spending fatigue in the cybersecurity market brought on by cybersecurity behemoth Palo Alto Networks' recent guidance reduction, CrowdStrike’s performance does not demonstrate a broader impact to the cybersecurity market," Berger wrote.
Other banks adjusting CrowdStrike include Well Fargo, which upped its price target by $55 to $435 a share; BMO Capital Markets, which bumped it by $103 to $425 a share, and Rosenblatt Securities, which pegged it $25 higher at $400.
Bank of America's Tal Liani, meanwhile, took his CrowdStrike price target to $400, while reiterating his buy rating on the stock, following what he called "another strong quarter of outperformance.
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"As sales cycles normalize and deal sizes continue to improve, we believe these guidance targets could ultimately prove conservative over the next few quarters," Liani said.
"Given the company's platform focus with add-on modules, CrowdStrike's single-agent approach remains a unique competitive advantage within the relatively fragmented endpoint security market."
CrowdStrike shares were marked 16.3% higher in early Wednesday trading to change hands at $345.27 each, a move that would extend the stock's six-month gain to around 107.6%.
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