We’re raising our CrowdStrike price target after shortsighted post-earnings
CrowdStrike on Tuesday evening reported quarterly beats on many of the key metrics that investors focus on. However, it also delivered mixed guidance. As a result, we’re not surprised to see some profit-taking in after-hours trading, following Tuesday’s record-high close of nearly $489 per share. Revenue in the fiscal 2026 first quarter increased 20% year over year to $1.1 billion, landing right in line with estimates, according to LSEG. Growth was seen in all major geographic regions. Adjusted earnings per share (EPS) declined 8% annually to 73-cents in the three months ended April 30, but that was ahead of the 65-cent estimate, LSEG data showed. Annual recurring revenue (ARR) jumped 22% to $4.44 billion, also ahead of the $4.42 billion estimate, according to FactSet. This represented a net new addition of $193.8 million. Remaining performance obligations (RPO) increased 45% year-over-year to $6.8 billion, beating the $6.16 billion FactSet consensus. Management also announced a new $1 billion share repurchase authorization. CRWD YTD mountain CrowdStrike YTD With a lot to like about the quarter and guidance we can live with, we’re raising our price target to $500 per share from $400. That reflects a premium of more than 9% to Wednesday’s indicated open around $457. Even with an after-hours decline of more than 6%, the stock was still up over 40% from its 2025 low of $321.63 on April 4 — two trading days after President Donald Trump ‘s evening announcement on April 2 of much higher than expected “reciprocal” tariffs. CrowdStrike shares never deserved to be that low, but a move like that must be respected. So, we’re maintaining our hold-equivalent 2 rating. Bottom line By nitpicking the results, the sellers Tuesday evening are missing the forest for the trees. Sure, CrowdStrike’s current quarter and fiscal year 2026 guidance were mixed. But in both cases, profitability was better than expected. More importantly, CEO George Kurtz said on the post-earnings conference call that CrowdStrike’s Falcon Flex subscription model is “accelerating platform adoption at a faster pace than we’ve ever seen before.” The reality is that demand for best-in-class cybersecurity is only going to grow as artificial intelligence advances and hackers adopt increasingly sophisticated tools. Cybersecurity is not a discretionary buy for corporations, it’s a critical expense that must be prioritized regardless of economic conditions or tariff fears. With net new ARR expected to accelerate in coming quarters — and management calling for further expansion of both adjusted operating income margin and free cash flow margin in its fiscal year 2027 to “at least 24%” and “more than 30%,” respectively — the stock’s post-release decline will likely prove to be a buying opportunity as it has in the past. Why we own it Cybersecurity is a must-have for companies in the digital age. Led by co-founder and CEO George Kurtz, CrowdStrike is one of the best there is (along with fellow…
Read More: We’re raising our CrowdStrike price target after shortsighted post-earnings