1 Cybersecurity Stock To Hold For 10 Years

The sheer volume of sensitive information stored in digital format is mind-boggling. Everything from medical records to financial data has been moved from paper files to electronic alternatives, and most major organizations keep trade secrets and intellectual property on their networks.

In addition to consumer and business data, critical infrastructure relies on digital controls. That includes water, electricity, energy, transportation, and communications. Any breach of these systems could result in disruption of these services – and that would be catastrophic for the people who depend on them.

Cybercriminals who seek unauthorized access to digital systems have grown more sophisticated as technology has advanced. They race to stay one step ahead of the systems put in place to stop them, and they are successful in achieving their goals often enough to be a substantial threat.

• In 2020, US healthcare organizations reported 92 separate ransomware attacks that caused $21 billion in losses. 
• In a 2021 survey, 86.2 percent of the organizations who responded said that they had been the victim of a successful cyberattack. 
• In the fourth quarter of 2021, DDoS (distributed denial of service) attacks increased roughly 4.5x year-over-year. 
• The global cost of cybercrime is estimated at $6 trillion for 2021, and that is expected to reach $10.5 trillion per year by 2025. 
• For 2021, global spending on cybersecurity resources came in at around $150 billion. 

It’s frightening enough when cybercriminals succeed in capturing medical records and financial data, but now the stakes are even higher. The Russian invasion of Ukraine has prompted serious questions about digital security on a global scale. Certainly, nations continue to use tanks and guns to fight battles on the ground, but cyberwarfare can disrupt on a much larger scale. This threat keeps leaders in both the public and private sectors up at night.

Protecting the digital world from bad actors is a difficult job, and very few companies are up to the challenge. Crowdstrike is one that consistently stands out among its cybersecurity peers. Does that mean Crowdstrike stock is a buy?

Crowdstrike: Threat Intelligence + Cyberattack Response 

Crowdstrike is a major presence in the cybersecurity market. The organization is known for advanced technology that is highly effective in protecting against various types of cyberattacks. In addition to endpoint and cloud workload security, Crowdstrike offers threat intelligence solutions and cyberattack response services.

For the 12-month period ending June 2021, the company controlled 14.2 percent of the endpoint security market share, putting Crowdstrike in the number one position. Crowdstrike has successfully differentiated its products from other cybersecurity platforms because it continuously demonstrates an ability to predict and prevent evolving methods of attack.

For example, Crowdstrike determined that the newest trend in cybercrime is a move away from attempts to write malware to the endpoint. Instead, attackers are focused on leveraging legitimate and stolen credentials to outmaneuver traditional antivirus products.

Crowdstrike’s Falcon Platform has demonstrated nearly perfect results in detecting and containing threats before they can move through the network to cause damage. Among other methods, Crowdstrike technology relies on comprehensive indicators of attack (IOA), identity-based security, automated orchestration, machine learning, and threat intelligence.

The Falcon Platform’s strong record of successful identification and removal of cyberthreats has made Crowdstrike a popular choice for organizations in the private and public sectors. As a result, the company is growing rapidly. Share prices are up more than 200 percent since Crowdstrike’s IPO on June 12, 2019.

Of course, it hasn’t always been a smooth ride, and recent volatility in Crowdstrike stock price has some investors concerned. Why did Crowdstrike stock drop nearly 30 percent over the past six months, and why is Crowstrike going up now? More importantly, is Crowdstrike a buy at its current price?

Is Crowdstrike Profitable? 

Crowdstrike reported its fourth-quarter and fiscal year 2022 financial results on March 9, 2022. This covers the period ending January 31, 2022. While Crowdstrike was profitable on a non-GAAP basis, the GAAP net loss totaled $42 million.

However, the fact that Crowdstrike isn’t profitable – yet – is normal for tech startups. Analysts are more interested in other figures. For example, Crowdstrike’s fiscal 2022 growth is a clear signal that the company has significant potential.

For the fiscal year ending January 31, 2022, Crowdstrike’s revenue totaled $1.45 billion. This represents an increase of 66 percent year-over-year. Operating cash flow came in at $574.8 million for the year, as compared to fiscal 2021’s $356.6 million, and free cash flow totaled $441.8 million – an increase as compared to fiscal 2021’s $292.9 million.

Why Did Crowdstrike Stock Go Up? 

Just before the earnings report was released, Crowdstrike stock hit a 52-week low. A combination of factors pushed share prices down, and most were unrelated to the company itself.

The Nasdaq as a whole has been struggling in recent months. Investors are trading out of technology stocks due to high levels of inflation and rising interest rates. To an extent, Crowdstrike stock was caught up in that sell-off.

The earnings report caused Crowdstrike to go up almost immediately. The company’s sustained growth and optimistic guidance are extremely attractive – and even more so when the current low price is factored in.

Crowdstrike’s leadership team projected revenue growth of 47 percent to 49 percent for fiscal 2023 (the 12-month period ending January 31, 2023). Guidance for adjusted net income is an increase between 56 percent and 70 percent, and adjusted earnings per share are expected to grow 54 percent to 69 percent.

Is Crowdstrike Stock A Buy? 

There is no question that the market for cybersecurity solutions will continue to expand for the foreseeable future. As more companies transition to cloud computing and remote work becomes standard practice, protecting against cyberattacks will become more urgent. That goes double for public and private sectors involved in national and international defense, given the risks associated with the Russian invasion of Ukraine.

Global market intelligence firm IDC pointed out that current cloud security spending is well below the amount needed to effectively protect against cyberattacks. Most organizations are not investing the recommended five to ten percent of their IT budgets in cybersecurity, despite the risks. Chances are, that will begin to change as the cost of cybercrime increases. As the market leader, Crowdstrike is well-positioned to benefit from that increased spending.

Crowdstrike stock has been upgraded by several highly-regarded firms in recent weeks because of the company’s strong fiscal 2022 results, the changing digital landscape, and volatile geopolitical conditions. For example, Goldman Sachs changed its rating for Crowdstrike stock from Neutral to Buy, and it gave a price target of $285 per share, up from the previous $241 per share.

Of 30 analysts surveyed, all but two rate Crowdstrike stock a buy. The median 12-month target price is $275 per share, with a high of $340 per share and a low of $212 per share. A share price of $275 would represent an increase of more than 35 percent over the price at the time of research, which makes Crowdstrike stock a smart buy.