CrowdStrike (CRWD +1.09%) is getting a lot of attention from investors these days. The company is at the forefront of a movement that uses artificial intelligence (AI) as the foundation of its cybersecurity services.
Its stock has already surged 145% over the past year, but one analytics firm believes CrowdStrike has further to run.
NASDAQ: CRWD
Key Data Points
CrowdStrike stock to $380?
Analysts at Redburn Atlantic raised their price target on CrowdStrike to $380 while maintaining a buy rating on the shares. That represents a potential upside for investors over the next 12 months or so of 14% compared to its current price. The analysts cited the opportunity presented by generative AI, which "presents another transformative layer" to cybersecurity.
Redburn Atlantic's analysts went on to say that large platform providers, including CrowdStrike, "stand to dominate the market once again," increasing its share in the endpoint and security operations spaces.
I believe the analysts have the right idea. CrowdStrike's results for its fiscal 2024 fourth quarter (ended Jan. 31), suggest plenty of potential growth ahead. Revenue of $845 million climbed 33% year over year, driven by a 33% increase in subscription sales. Furthermore, CrowdStrike's annual recurring revenue climbed 34% year over year to $3.44 billion. This suggests the company's growth spurt is poised to continue.
Perhaps more important to investors was the fact that CrowdStrike swung from a loss to a profit and continued to generate strong operating and free cash flow. So things are certainly moving in the right direction.
CrowdStrike currently sells for 25 times sales, making its stock price seem outrageous at first glance. However, analysts expect the company to increase revenue to roughly $4 billion next year and $5 billion by 2026. If those estimates are accurate -- a big if -- CrowdStrike's forward price-to-sales ratio drops to 15, making it a bargain at this price.
The evidence suggests that CrowdStrike stock is a buy, even as it hits new heights.
