By Wallace Witkowski, MarketWatch
CrowdStrike Holdings Inc.’s stock soared Friday after the cybersecurity company demonstrated in its quarterly results and outlook that it’s well-positioned for the new realities of a work-from-home world still reeling from the spread of COVID-19.
CrowdStrike /zigman2/quotes/212513426/composite CRWD -1.54% shares soared nearly 25% Friday to hit an intraday high of $51.97, and closed up more than 17% at $49.01. Shares are up 24% for the week, but are down 1.7% for the year.
Not only did CrowdStrike top Wall Street estimates for the fourth quarter, but also the company issued a strong outlook for 2020 late Thursday that it characterized as conservative.
Of the 21 analysts who cover CrowdStrike, 16 have overweight or buy ratings, four have hold ratings, and one has a sell rating. Six analysts hiked their price targets while three cut theirs, resulting in an average price target of $73.15, up from a previous $72.35, according to FactSet data.
As California and New York adopt shelter-in-place orders to combat the spread of the SARS-CoV-2 coronavirus, the ranks of millions working from home is only looking to increase, and that increases the need for more dynamic cybersecurity measures.
JPMorgan analyst Sterling Auty, who has an overweight rating and Wall Street’s most bullish price target on the stock of $109, said CrowdStrike is benefiting from a “couple of significant advantages” right now.
“First, the largest installed base of endpoint security in the corporate world belongs to Symantec and post its acquisition, customers and channel partners are driving significant share shift over to CRWD as the leading technology provider,” Auty said.
On the analyst call late Thursday, CrowdStrike co-founder and Chief Executive George Kurtz confirmed that the company has taken share from Symantec’s enterprise security business following its recent acquisition by Broadcom Inc. /zigman2/quotes/200646538/composite AVGO -0.19% .
“Second, the architecture of its solutions being cloud first with the ability to implement without the need for a host (laptop, server, virtual cloud server, etc.) or needing to reboot is key given the need to implement these solutions remotely,” Auty said. “Third, cybersecurity spending is resilient even in tough economic times as bad actors look to exploit any situation that they can.”
Jefferies analyst Brent Thill, who has a hold rating and a $55 price target, said CrowdStrike return on investment “as a security cloud becomes even more evident with customers shifting toward a more distributed and remote workforce.”
“Cybersecurity remains mission critical for business, particularly as they look to protect endpoints and workloads in a more distributed remote workforce,” Thill said. “CRWD has not seen any operational disruptions as 70% of its workforce already worked remotely.”
Stifel analyst Gur Talpaz, who has a buy rating and a $90 price target, remarked on how upbeat the analyst call was given the wealth of dreary news as of late.
“Listening to CrowdStrike’s Q4 earnings call, you’d be hard-pressed to believe that we were in the midst of a global pandemic that has already left its mark on multiple industries and the broader economy,” Talpaz said.
“CrowdStrike has always run a distributed organization with both company leadership and employees dispersed across the globe,” Talpaz said. “We believe this has served the company well but, more importantly, means they are well-equipped to handle the potential challenges that come from a broader remote workforce.”
CrowdStrike’s gains are beginning to mirror those of another stock that’s cashing in on the work-from-home trend: Zoom Video Communications Inc. /zigman2/quotes/211319643/composite ZM +3.87% Shares of Zoom, which closed up 5.5% Friday, are up 92% on the year.
In comparison, the ETFMG Prime Cyber Security ETF /zigman2/quotes/207892345/composite HACK -0.67% declined 0.2%, and is down nearly 26% for the year. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.24% fell 4.4% Friday, and is down 29% on the year, while the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.03% fell 3.8%, and is down 23% on the year.