CrowdStrike Earnings Brings Cheer to Cybersecurity Stocks
CrowdStrike finished off earnings season for cybersecurity stocks on a positive note. However, its upbeat message about its broader platform could spell trouble for its rivals.
stock was up 4.4% at $318.93 in Wednesday morning after the company reported quarterly earnings that beat expectations on Tuesday evening.
CrowdStrike’s relatively confident outlook came as a relief after a number of other software companies had warned of weaker spending—creating concerns that investment in artificial intelligence is leaving fewer dollars in IT budgets for other areas.
“Amidst a challenging wave of software earnings, CrowdStrike continued its consistent execution and turned in another solid quarter. We believe the company is setting itself apart from the pack,” wrote Oppenheimer analyst Ittai Kidron in a research note.
Kidron reiterated a Buy rating on CrowdStrike stock and raised his target price to $400 from $355.
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The cheer looked to spread across the cybersecurity sector on Wednesday. Shares of
and
Okta
,
who were punished after giving more cautious commentary in their own earnings, were trading up early on Wednesday, as were CrowdStrike’s peers
and
However, it isn’t clear that CrowdStrike’s positivity should be extrapolated across the entire sector. More spending on its platform could mean that customers are consolidating their cybersecurity providers.
After establishing its market position in endpoint security—protecting the connection between a corporate network and devices that workers use—CrowdStrike is broadening out into various areas such as cloud security, identity protection, and analytics. That’s a competitive threat to companies with more narrowly based products.
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Offering a wider platform of cybersecurity is hardly a new idea, and CrowdStrike is going up against rivals taking similar steps. Palo Alto is also broadening its own platform and is even offering to give away free access to certain features to rivals’ customers, with the goal of taking a larger share of IT spending budgets over the long run.
CrowdStrike isn’t doing anything quite so dramatic but its own ambitions could still trouble peers.
“Our sense is that CrowdStrike continues to leverage its platform to provide more value to customers without directly impacting its pricing; however, we also believe there is some pricing effect that tends to negatively impact its smaller competitors,” wrote William Blair analyst Jonathan Ho in a research note.
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Ho kept an Outperform rating on CrowdStrike stock.
Write to Adam Clark at adam.clark@barrons.com
