CrowdStrike Holdings, Inc. (CRWD) saw impressive growth over the past year, dramatically outperforming the S&P 500. The cybersecurity technology company shot up the WhaleWisdom Index to a ranking of 5, up from 30. Hedge funds and institutions are actively buying, sending CrowdStrike’s stock soaring.
CrowdStrike operates as a software company specializing in cloud-based solutions for business, endpoint security, threat intelligence, and cyberattack response services. Tech companies like CrowdStrike have benefited from the emergency shift to remote work during the coronavirus pandemic, as well as an increased threat of cyber-attacks in 2020. The pandemic contributed to a surge in growth; however, demand for the company’s products and services won’t simply dissipate from distributing vaccines for the virus. Many companies now see continued remote work and online collaboration as part of their future business model under a new normal.
Hedge Funds and Institutions Are Enthusiastic
Looking at activity by the top hedge funds in the fourth quarter, the aggregate 13F shares held increased to about 54.1 million from 49.9 million, an increase of approximately 8.5%. Hedge funds created 48 new positions, 88 funds added to an existing holding, 17 exited, and 50 reduced their stakes. Institutions are also buying the stock, with aggregate holdings increasing by about 7.6% to approximately 142.8 million from 132.7 million.
Earnings on the Rise
Analysts estimate that year-over-year increases would ultimately bring earnings to $2.45 per share by January 2025, up from just $0.29 for 2022. Revenue is also predicted to rise and reach approximately $4.1 billion in 2026, more than tripling initial estimates of $1.3 billion in 2022.
Analysts Raise Price Targets after Q4 Results
Matthew Hedberg from RBC Capital Markets kept an Outperform rating on CrowdStrike’s stock and raised its price target to $250 from $220. Jefferies Financial Group analyst Brent Thill was also impressed with its growth and noted that cybersecurity tailwinds are not expected to slow down soon. Jefferies maintained a Buy rating on CrowdStrike and a $275 price target. Needham & Co. also raised its price target on the stock to $275 from $200 and kept a Buy rating.
Fourth-quarter results showcase record growth and rates of return. CrowdStrike’s subscription revenue increased approximately 77% to $244.7 million, while its annual recurring revenue (ARR) surpasses a $1 billion milestone.
CrowdStrike’s growth and future estimates are certainly encouraging for investors. The company has benefited from changes in business practices and increased cyber threats during the pandemic and is well-positioned to meet continued demand for its technology and services.