CrowdStrike Holdings, Inc. (CRWD) has made a significant upward climb since March of 2020, outperforming the S&P 500 and rising by approximately 235% compared to the S&P’s gain of about 14.5%. The cybersecurity technology company’s impressive growth has made it a very profitable year.
CrowdStrike offers cloud-based solutions for finance, retail, healthcare, and public sectors, including threat intelligence and cyberattack response services. While many technology companies have seen growth during the coronavirus pandemic, CrowdStrike appears to be exceptionally fortunate that the pandemic’s influence on businesses moving more toward remote work and cloud-based solutions provides an extra boost to 2020 financial performance.
Underwhelming Response from Hedge Funds and Institutions
Looking at third quarter activity by the top hedge funds, the aggregate 13F shares held decreased to about 49.0 million from 55.1 million, a decrease of approximately 11.2%. Of the hedge funds, 37 created new positions, 47 added to existing holdings, 34 exited, and 69 reduced their stakes. Institutions were also selling, decreasing their aggregate holdings by about 2.1%, to approximately 132.7 million from 135.5 million. It’s not surprising that CrowdStrike lost some traction on the WhaleWisdom Heat Map, sliding to a ranking of 30 from 15.
Analysts See Growth Potential
Analysts are raising price targets after recognizing CrowdStrike’s growth potential. Subscription revenue was up about 87%, and the technology company has been able to generate positive operating and free cash flow. CrowdStrike forecasted revenue ranging from $245.5 to $250.5 million in the fourth quarter. The Royal Bank of Canada (RBC) raised its price target on the stock from $170 to $180, rating it an outperform. Meanwhile, Jefferies Financial Group rated CrowdStrike a hold. It raised its price target from $150 to $160, noting new customer additions and increased usage.
Encouraging Multi-year Estimates
Analysts anticipate that earnings per share will rise between 2021 and 2024, with a peak of approximately 70% year over year growth in 2023 to $0.54. This growth would bring revenue to about $859.2 million in 2021 at 78.5%. That expansion is anticipated to continue until 2023 and bring revenue to approximately $1.5 billion.
CrowdStrike’s recent growth and future estimates are certainly encouraging for investors, despite some decreases in hedge fund portfolios. CrowdStrike is well-positioned to act on increased demand for its technology and services. Estimates paint a pretty picture of continuing demand and forward momentum.