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As we approach 2025, the cybersecurity industry continues to be a critical area for investment, driven by an escalating number of cyber threats globally. One standout in this high-growth sector is CrowdStrike (CRWD), which continues to solidify its position as a market leader - despite facing a significant challenge earlier this year. Known for its cutting-edge cloud-native cybersecurity solutions, the company has rebounded strongly from the global IT outage incident in July, demonstrating its resilience and robust incident response capabilities.
CrowdStrike recently achieved a major milestone by crossing the $1 billion revenue mark for the quarter, a testament to the growing demand for its innovative cybersecurity services. Analysts are also taking note of CrowdStrike’s robust recovery and growth trajectory. Prominent among them is Dan Ives at Wedbush, who along with others, has issued bullish notes affirming the stock’s strong position in the market.
As investors look towards 2025 and beyond, CrowdStrike’s recent performance and the growing importance of cybersecurity make it a standout candidate for those seeking to capitalize on opportunities in the cybersecurity space. Let’s delve into its prospects.
About CrowdStrike Holdings Stock
Valued at a market cap of $89.2 billion, CrowdStrike Holdings (CRWD) is a leader in global cybersecurity, revolutionizing modern security with the world’s most advanced cloud-native platform designed to protect critical enterprise risk areas - endpoints and cloud workloads, identity, and data. Its CrowdStrike Falcon platform, powered by the CrowdStrike Security Cloud and world-class artificial intelligence (AI), utilizes real-time indicators of attack, threat intelligence, evolving adversary tradecraft, and extensive telemetry from across the enterprise to deliver hyper-accurate detections, automated protection and remediation, top-tier threat hunting, and prioritized observability of vulnerabilities.
Shares of the cybersecurity firm have rallied 42.6% on a year-to-date basis, outperforming the broader market.
Recent News for CRWD Stock
On Nov. 7, CrowdStrike announced an expanded distribution partnership with Ignition Technology, which will bring the CrowdStrike Falcon cybersecurity platform to Ignition’s partner base in Ireland. This expansion leverages the success of CrowdStrike and Ignition in the U.K. and Nordics, where they have grown their regional partner business by more than 85% year-over-year, fueled by increased customer demand for cybersecurity transformation, platform adoption, and vendor consolidation.
“Innovative and driven partners like Ignition doubling down with CrowdStrike validates the Falcon platform’s market leadership in stopping breaches, yielding the outcome of accelerating business traction across regions and customer segments,” said Daniel Bernard, chief business officer of CrowdStrike. “We’re proud of the momentum we’ve built with Ignition in key European markets and look forward to bringing our cutting-edge technology to even more businesses in Ireland.”
On Nov. 6, CrowdStrike announced that it had agreed to buy SaaS security company Adaptive Shield. With this acquisition, CrowdStrike will be the sole cybersecurity vendor offering comprehensive, end-to-end protection against identity-based attacks throughout the entire modern cloud ecosystem. This deal will add significant value to CrowdStrike as more enterprises integrate AI applications into the workplace.
“With the acquisition of Adaptive Shield, CrowdStrike will continue to set the standard for identity-based protection in the cloud, delivering best-in-class SaaS protection from the Falcon platform,” said George Kurtz, CEO and founder of CrowdStrike.
CrowdStrike Crosses $1B Revenue Milestone and Gets Wall Street Praise
CrowdStrike exceeded $1 billion in quarterly revenue for the first time in its latest earnings report, impressing industry observers who point out that the cybersecurity leader aims to maintain this momentum into FY26. Moreover, the global IT outage caused by a July update to its Falcon platform seems to be fading into the past, as the platform continues to exhibit a strong gross retention rate.
On Nov. 27, Wedbush analysts, led by Daniel Ives, raised their price target on the stock to $390 from $330 and maintained an Outperform rating.
“The company raised its FY25 guidance across the board, reflecting the continued strength of module adoption with 2/3 of its customers having 5+ modules while also seeing further strength on the profitability front,” the analysts noted.
Also, Needham maintained its “Buy” rating and boosted its CRWD stock price target to $420 from $360.
“CrowdStrike offered multiple data points demonstrating the growing adoption of Falcon Flex,” said Needham analysts, led by Mike Cikos, in a note. “We view the launch of Flex less than a year before the July 19th incident as fortunate, as it has provided CrowdStrike a vehicle to drive greater adoption through more strategic customer partnerships. CrowdStrike’s Flex TCV nearly doubled qtr-qtr to $1.3B from $700M in the previous quarter.”
In addition, JMP kept its “Market Outperform” rating and a $400 price target. “In the wake of the July 2024 IT outage, CrowdStrike has gone to great lengths to preserve customer relationships and reduce the potential for churn,” said JMP analysts Trevor Walsh and Rustam Kanga, in an investor note.
A slew of other Wall Street brokerages, including BofA, Wells Fargo, Piper Sandler, Citi, RBC Capital, and Baird, responded positively to the company’s performance by raising their price targets on the stock.
A Deep Dive into CRWD’s Q3 Results
On Nov. 26, CrowdStrike reported better-than-expected Q3 results and raised its FY25 guidance. However, this was overshadowed by conservative Q4 guidance, causing the stock to decline by over 4% in the subsequent trading session.
CrowdStrike generated revenue of $1.01 billion in the third quarter, marking a 29% year-over-year growth and surpassing Wall Street’s estimates by $26.97 million. As previously noted, this was the first quarter in which the company surpassed the $1.0 billion revenue mark. Like many software and cloud companies, CrowdStrike primarily generates revenue through a recurring subscription model. In the October quarter, subscription revenues accounted for 95% of total revenues. Notably, subscription revenues rose 31% year-over-year to $963 million, driven largely by the acquisition of new customers and increased sales of sensors and modules to existing customers. Adjusted earnings per share came in at $0.93, beating the consensus by $0.12.
Annual recurring revenue (ARR) rose 27% year-over-year to $4.02 billion, demonstrating the company’s continued leadership, despite July's flawed update that crashed thousands of computers worldwide. It closed a record 260 transactions worth over $1 million during the quarter. With the figure surpassing the $4 billion mark, CRWD has become the fastest pure-play cybersecurity software company to achieve this milestone. CrowdStrike also reported a 97% customer retention rate, down less than 0.5 percentage point. The strength in retention stemmed from the value customers derive from the Falcon platform. In addition, the dollar-based net retention rate stood at 115% as customers took advantage of the commitment packages and expanded their Falcon platforms.
Falcon Flex has the potential to accelerate CrowdStrike’s growth by facilitating the execution of larger deals under this program. Falcon Flex enables enterprises to gradually scale their adoption of the platform. Management highlighted that the Flex subscription program increases platform stickiness, which could lead to better customer retention in the future. CRWD closed over 150 Falcon Flex transactions in Q3, representing a total deal value of more than $600 million. Notably, customers of Falcon Flex account for a total deal value of $1.3 billion.
It’s also worth noting that CrowdStrike rolled out several new features as part of its SIEM offering in the third quarter, including AI-generated parsers, AI Investigator, and AI Alert Triage. AI Investigator enables SecOps analysts to use the GenAI-powered query builder to speed up the analysis process. At the same time, Charlotte AI enables enterprises to automate detection triage, a traditionally labor-intensive process, enhancing their response rate.
Looking forward to Q4, management expects revenue to range between $1.03 billion and $1.04 billion, with non-GAAP EPS projected at $0.84 to $0.86. Although the midpoint of the revenue forecast surpassed the consensus, the midpoint of the non-GAAP EPS forecast fell slightly short, contributing to the stock’s post-earnings decline.
The most evident sign that the company anticipates no lasting impact from the July IT outage is its decision to boost its FY25 guidance. Management raised its full-year revenue guidance to $3.92 billion-$3.93 billion, up from the previous range of $3.89 billion-$3.90 billion. CRWD also expects improved profitability, with adjusted EPS now projected to range between $3.74 and $3.76 per share, up from the previous forecast of $3.61 to $3.65 per share.
CRWD Valuation and Analysts’ Estimates
According to Wall Street estimates, CRWD is anticipated to post a solid 21.70% year-over-year non-GAAP EPS growth to $3.76 in fiscal 2025. Moreover, its top line is projected to grow by an even larger rate of 28.60% year-over-year, hitting $3.93 billion in FY25.
From a valuation perspective, CRWD stock is currently trading at a substantial premium compared to its cybersecurity peers. The stock’s forward P/E multiple stands at 93.07x, significantly higher than the sector median of 26.09x, though still below its five-year average of 372.43x. A similar pattern is evident in its expensive forward EV/Sales ratio of 21.06x, which is considerably higher than the sector median of 3.28x, but slightly below its five-year average of 23.98x.
That said, I believe management’s execution following the outage demonstrates that the company is well-positioned to deliver the future earnings growth reflected in its premium valuation.
Options Market Sentiment on CrowdStrike Stock
Looking at the option chain for January 17, 2025, the $360.00 CALL option has a bid/ask spread of $20.60/$21.90, while the $360.00 PUT option displays a spread of $13.95/$14.45. Remember that this option strike is closest to the current stock price. We can now determine the expected price movement by using the midpoint prices of these options:
14.20 (360.00 put) + 21.25 (360.00 call) = 35.45/364.16 = 9.7%
Based on current prices and employing the long straddle strategy, the options market indicates that CRWD stock could experience a movement of about 10% by the January options expiration from the $360.00 strike price. That would place the stock in a trading range of about $328.8 to $399.5.
Notably, at the $360.00 strike price, open call options outnumber open put options by about five to one, with 2,311 open calls versus 430 open puts. This reflects a strong bullish sentiment in the options market and suggests a higher likelihood that the stock will continue its upward move toward its all-time high.
What Do Analysts Expect For CRWD Stock?
Analysts have a consensus rating of “Strong Buy” on CrowdStrike stock. Out of the 44 analysts offering recommendations for the stock, 34 recommend a “Strong Buy,” three advise a “Moderate Buy” rating, and the remaining seven assign a “Hold” rating.
The average price target for CRWD stock is $373.73, indicating an upside potential of only 2.6% from current levels. However, the Street-high price target of $424.00 suggests a notable 16.4% upside potential.
