On Wednesday, Evercore ISI updated its outlook on CrowdStrike Holdings (NASDAQ:CRWD), significantly raising the price target to $405.00 from the previous $255.00, while maintaining an Outperform rating on the stock.
The firm highlighted CrowdStrike's robust performance at the close of the fiscal year and its positive guidance for FY25, suggesting that recent concerns might be specific to individual cases rather than indicative of a broader trend.
The upbeat sentiment follows CrowdStrike's consistent execution, which resulted in a top and bottom-line beat, reinforcing its position in the cybersecurity sector.
Despite ongoing macroeconomic pressures, management's tone indicated a stable environment comparable to the situation three to six months prior. The company's federal business continues to show strength without any unusual activity.
CrowdStrike's strategy as a technology consolidator is evidenced by the adoption of an average of five modules in all new deals, with 28 modules now available. Positive trends were noted in identity, SIEM, and CloudSec metrics.
Additionally, the recent acquisition of Flow Security, a cloud security tool specializing in data security posture management, was highlighted as a technology and team enhancement rather than a direct contributor to annual recurring revenue (ARR).
The company has also seen early successes with partnerships, including Dell (NYSE:DELL) and Pax8, and the general availability of Charlotte AI last week, which has already attracted some paying customers. CrowdStrike reported a net new ARR of $282 million, a 29.7% increase year-over-year, surpassing expectations.
While specific guidance for FY25 ARR was not provided, Evercore ISI forecasts a 10% growth rate for net new ARR in FY25, slightly below the anticipated market consensus.
Management reiterated their long-term target of reaching $10 billion in ARR over a 5 to 7-year period. The projection takes into account conservative guidance for the first quarter and full fiscal year, solid growth in net new ARR, stable net retention rates, record pipelines, higher win rates, and a continued emphasis on balancing profitability with growth.
These factors have reinforced Evercore ISI's long-term thesis on CrowdStrike, culminating in the adjusted price target of $405, based on 20 times CY25 sales.
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