CrowdStrike Holdings
raised its targets for subscription gross margins and operating margins, leaving Wall Street optimistic about the security software company.
At a briefing at Fal.Con,
CrowdStrike
(ticker: CRWD) said it was raising its new target model of subscription gross margin to 82% to 85% of revenue, up 400 basis points from its previous target, and boosting its operating margin target to 28% to 32%, up 900 basis points. The company said the timeframe for meeting those targets was three to five years.
The stock was down 1.1% to $162.09 on Thursday, reversing gains during the premarket session.
“We continue to be impressed with the company’s pace of innovation and believe it is set up well to benefit from continued tailwinds of digital transformation, increasing cloud adoption, and a heightened threat environment,” wrote Truist Securities analysts in a report. “The company is transforming from being just an endpoint player into a platform provider for an enterprise’s security needs.” They maintained their Buy rating on the stock and increased their price target to $200 from $175.
Needham analysts, who also reiterated their Buy rating and boosted their price target to $215 from $200, struck a similar tone.
“According to the head of Marketing, Crowd has focused on pipeline build as a north star KPI,” they wrote. “At a recent meeting the pipe build goals were substantially beat, which we regard as an impressive indicator for future growth.”
Guggenheim also was bullish on the stock, maintaining a Buy rating in a research report and pushing the price target to $191 from $175.
“We’re often asked what inning CrowdStrike is in regarding the penetration of its market(s), where the emphasis is on the endpoint security market. With almost half of endpoints still employing legacy signature-based technology, even the traditional endpoint market has ample runway,” analysts wrote. “In addition, CrowdStrike has significantly redefined and expanded this market to something that is unrecognizable to the market as defined 10 years ago.”
Write to Emily Dattilo at [email protected]
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