On Friday, RBC Capital Markets analyst Matthew Hedberg increased the price target on CrowdStrike Holdings (NASDAQ:CRWD) shares to $420 from the previous $365, while maintaining an Outperform rating on the cybersecurity firm's stock. Currently trading at $358.55, CrowdStrike has garnered strong analyst support, with consensus targets ranging from $185 to $540. According to InvestingPro data, the stock appears to be trading above its Fair Value, joining other premium-valued tech companies.
Hedberg highlighted CrowdStrike's continued appeal as an investment, noting that although it is not their top pick for 2025, the company presents a compelling opportunity, especially as the memory of the July 2024 outage fades. The analyst anticipates that the second half of fiscal year 2026 will offer an attractive Flex (NASDAQ:FLEX) renewal chance, which is expected to boost growth momentum.
The company's strong financial health is evident in its impressive 31.35% revenue growth and robust liquidity position, with a current ratio of 1.86. This optimism is partly based on the successful adoption of new product modules, particularly in cloud security, identity security, and next-generation Security Information and Event Management (SIEM).
The revised price target is supported by CrowdStrike's anticipated annual recurring revenue (ARR) growth. RBC Capital projects a 19% ARR increase and a 3% net new ARR (NNARR) growth for fiscal year 2026, which the firm believes are conservative estimates compared to the 22% ARR and -12% NNARR figures estimated for fiscal year 2025.
The $420 price target is derived from a 22 times multiple of the company's expected enterprise value to sales (EV/S) for calendar year 2025, which is a premium relative to its peers in the high-growth security sector. This valuation also translates to 89 times the forecasted free cash flow (FCF) for the same period. RBC Capital justifies this premium based on a long-term perspective of CrowdStrike's growth and profitability potential.
Hedberg also emphasized CrowdStrike's effective land-and-expand business model, which benefits from its Software (ETR:SOWGn) as a Service (SaaS) delivery and the ease with which customers can add additional modules without needing extra configuration or consulting services.
This model positions CrowdStrike to achieve strong net expansion rates as the company continues to upsell more seats (endpoints) and modules to its existing customer base. With a gross profit margin of 75.24% and strong cash generation, InvestingPro analysis reveals 13 additional key insights about CrowdStrike's financial strength and market position, available in the comprehensive Pro Research Report.
In other recent news, cybersecurity firm CrowdStrike has achieved a significant sales milestone, becoming the fastest pure play SaaS cybersecurity vendor to surpass $1 billion in total sales with SHI International. This accomplishment underscores the growing demand for AI-powered cybersecurity solutions and the effectiveness of CrowdStrike's partnership with SHI International. Over the past three years, more than 70% of the revenue from this partnership has been generated, reflecting the market's appetite for platform consolidation.
Stifel analyst Brad Reback commented on the milestone, stating that it indicates continued momentum within the channel. CrowdStrike's financial health has also been highlighted, with the company showing a 75.24% gross profit margin and a 31.35% revenue growth over the last twelve months.
CrowdStrike has also undergone significant changes in its stock structure, converting all outstanding Class B shares into Class A shares, which has altered the voting power landscape of CrowdStrike's shareholders.
Analyst firms such as Mizuho (NYSE:MFG) Securities, KeyBanc, and TD Cowen have maintained positive ratings on CrowdStrike, with Mizuho raising the firm's price target to $385, KeyBanc reiterating an Overweight rating with a $395 target, and TD Cowen reaffirming a Buy rating with a $380 target.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.