CrowdStrike Is ‘Largest Beneficiary of Increased Attack Environment.’ It’s Still a Buy, Analyst Says.

Barrons2022-04-19

CrowdStrike stock was dropping on Monday, even after Jefferies renewed its endorsement of the cybersecurity software platform, citing optimism over increased demand.

Analyst Joseph Gallo assumed coverage of CrowdStrike (ticker: CRWD) at a Buy and $275 price target. The stock was previously covered by analyst Brent Thill, who also rated it a Buy.

Gallo’s initial take on the stock was bullish, with the analyst saying he saw it as a “category winner” with high enterprise renewal rates, impressive gross margin, and an addressable market that could “sustain hyper growth for years.”

Cybersecurity has been gaining traction as more companies continue to operate in a hybrid environment and security breaches become more sophisticated, he said. Security budgets are likely to keep growing as a percentage of spending in IT, Gallo added.

“CRWD is the largest beneficiary of an increased attack environment with a shortage of security personnel reducing the risk of a future material [revenue] deceleration,” he wrote in a research note on Monday.

Yet despite Gallo’s optimism, CrowdStrike fell 4.4% to $224.99 on Monday. The stock has gained 9.9% this year, as analyst sentiment continues to improve.

Goldman Sachs analyst Brian Essex upgraded the stock to Buy from Hold last week and raised his price target to $285 from $270. Essex believes CrowdStrike could benefit from an increased corporate focus on security as a result of Ukraine war.

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