CrowdStrike Holdings, Inc. (CRWD) saw its stock rebound slightly in June, after almost six months of disappointing performance during a volatile market. CrowdStrike continues to underperform the S&P 500, declining by approximately 25%, while the S&P has been flat over the past year. Despite the fluctuations, hedge funds were actively buying the stock in the first quarter, though the stock slid on the WhaleWisdom Heatmap to thirteen from nine.
CrowdStrike is a cybersecurity technology company that provides customers with cloud-based workload and endpoint security. CrowdStrike leverages modern technologies such as artificial intelligence (AI) and cloud computing and provides services such as threat intelligence and cyberattack response.
Hedge Funds Are Buying
Despite CrowdStrike’s slowdown in performance, hedge funds were very bullish on the stock during the first quarter. Hedge funds increased their holdings, and the aggregate 13F shares rose to approximately 50.2 million from about 48.7 million, an increase of roughly 3.1%. Overall, 49 hedge funds created new positions, 99 added to an existing holding, 45 exited, and 70 reduced their stakes. Institutions also added shares to their portfolios, increasing aggregate holdings by about 5.1% to approximately 153.0 million from 145.6 million. The 13F metrics between 2019 and 2022 show that funds remained reasonably steady despite CrowdStrike’s fluctuating stock price.
Encouraging Multi-year Estimates
Analysts predict earnings per share will rise in the coming years, increasing to $1.76 by January 2024, up from an expected $1.20 for January 2023. Robust performance is anticipated to bring revenue to roughly $3.0 billion by early 2024, up from an estimated $2.2 billion in 2023.
Analysts Share a Range of Price Targets
Analysts are far from consensus about the stock, with some raising price targets as others lower them. Morgan Stanley analyst Hamza Fodderwala raised the firm’s price target on CrowdStrike to $195 from $181 while maintaining an Equal Weight rating on shares. Fodderwala noted a strong technology spending environment and favorable revenue guidance for the second quarter. Analyst Joseph Gallo of Jefferies & Company, Inc. raised his firm’s price target on the cybersecurity stock to $215 from $200, citing impressive annual recurring revenue growth. Gallo kept a Buy rating on CrowdStrike’s shares. Analyst Rudy Kessinger of D.A. Davidson & Co. took a different view and lowered the firm’s price target on CrowdStrike to $235 from $280. Davidson adjusted the price target based upon consideration of peer competitors but also kept a Buy rating on shares. Oppenheimer & Co. analyst Ittai Kidron maintained an Outperform rating on shares, factoring in the potential for macroeconomic headwinds. Kidron lowered the firm’s price target to $250 from $300 but noted that the technology company has the opportunity for growth.
Positive Outlook Beyond 2022
While CrowdStrike’s growth has slowed, hedge funds are still buying shares, and earnings estimates through 2024 are encouraging. Demand for the company’s cybersecurity-themed services should continue to gain strength, and the technology stock appears to be an attractive opportunity for long-term investors.