icon
icon
icon
icon
Upgrade
upgrade
CrowdStrike: RBC Capital Raises Price Target to $420 Amidst Positive Outlook
AInvestSaturday, Jan 4, 2025 7:29 am ET
3min read
ADBE --
CRWD --
RBC --


RBC Capital Markets has raised its price target for CrowdStrike (CRWD) to $420 from $365, maintaining an Outperform rating on the shares. The firm's bullish outlook on the software sector for 2025, driven by multiple catalysts, has contributed to this upward revision. Spending trends have stabilized and improved in some cases, generative artificial intelligence (AI) presents new opportunities, and first-half 2025 estimates benefit from easy compares as management teams "lean into growth." RBC's favorite ideas in the sector include Adobe (ADBE), Microsoft (MSFT), and Snowflake (SNOW) in large-cap, Gitlab (GTLB) and Guidewire Software (GWRE) in mid-cap, Clearwater Analytics (CWAN), Magnite (MGNI), and Varonis Systems (VRNS) in small-cap, and Dynatrace (DT), MongoDB (MDB), and Nexxen (NEXN) as "non-consensus ideas."



CrowdStrike's strong financial performance and growth prospects have played a significant role in RBC Capital's price target increase. The company's Annual Recurring Revenue (ARR) grew 27% year-over-year (YoY) to $4.02 billion in Q3 FY25, making it the fastest pure-play cybersecurity software company to surpass $4 billion in ARR. Total revenue also exceeded $1 billion for the first time, growing 29% YoY, while subscription revenue increased 31% YoY. Despite the impact of the July 19 incident, CrowdStrike reported Free Cash Flow (FCF) of $231 million, representing 23% of revenue and achieving a Rule of 51. The company's ability to innovate and deliver comprehensive, scalable solutions remains its competitive edge, as evidenced by its expanding module offerings and clear ROI. Management has reiterated its long-term goal of reaching $10 billion in ARR by FY2031, highlighting the scalability and stickiness of its platform.



RBC Capital's 2025 outlook for the software sector, combined with CrowdStrike's strong financial performance and growth prospects, has led to the price target increase. The firm believes that 2025 is likely another good year for software, with multiple catalysts driving growth. These catalysts include stabilized and improved spending trends, the opportunity for generative AI to drive new innovations, and first-half 2025 estimates benefiting from easy compares as management teams "lean into growth." CrowdStrike's competitive landscape, characterized by fierce competition and the need to stay ahead, has not deterred RBC Capital from maintaining a bullish outlook on the company. Instead, the firm's favorite ideas in the sector, including CrowdStrike, reflect the potential for growth and innovation in the software sector.

In conclusion, RBC Capital's price target increase for CrowdStrike is driven by the firm's positive outlook on the software sector for 2025 and the company's strong financial performance and growth prospects. The firm's bullish stance on the sector, combined with CrowdStrike's competitive landscape and innovative solutions, has contributed to the upward revision in the company's price target. As the software sector continues to grow and evolve, investors should keep an eye on CrowdStrike and other leading software companies to capitalize on the opportunities presented by the market.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.