CrowdStrike gains after price target boost on growth prospects

By Liz Moyer

Investing.com -- Morgan Stanley analysts believe investors have gotten overly bearish on CrowdStrike Holdings Inc's (NASDAQ:CRWD) near and longer-term outlook for growth, raising their price target in a note on Monday.

The analysts set their new price target to $150 from $135. They rate the stock overweight. At $122.09 currently, the new target implies nearly 23% upside. Shares of CrowdStrike were up 4% on Monday and are up 16% so far this year.

CrowdStrike provides cybersecurity services, both for the cloud and endpoint, and cyberattack response services.

The research note expressed confidence in 25% or greater annual recurring revenue CAGR growth in the next three years, nearly doubling annual recurring revenue to $5 billion by 2025.

Artificial intelligence will be a driver of growth, the note said. Morgan Stanley said as hackers attempt to use AI to develop new malware and attack techniques, CrowdStrike is in a strong position. “We think a vast trove of data positions CrowdStrike favorably against the growing threat (and opportunity) posed by greater AI adoption,” the note said.

CrowdStrike is expected to report fourth-quarter earnings of 43 cents a share on March 9. Sales are expected to be $625 million, and annual recurring revenue is expected to be $2.5B.

Morgan Stanley also expects cloud security and identity protection to contribute more meaningfully to growth over the next few years and represent approximately one-third of total annual recurring revenue by 2025.