CrowdStrike Holdings, a leading security software company, has recently announced an increase in its targets for subscription gross margins and operating margins. The news has left Wall Street optimistic about the company’s future prospects.
Higher Margins
During a briefing at Fal.Con, CrowdStrike revealed that it is raising its new target model for subscription gross margin to be between 82% to 85% of revenue, which is a 400 basis point increase from its previous target. Furthermore, the company is also boosting its operating margin target to 28% to 32%, up 900 basis points. CrowdStrike has set a timeframe of three to five years to achieve these targets.
Positive Outlook
Despite a slight decline in stock value during Thursday’s premarket session, analysts at Truist Securities expressed their confidence in CrowdStrike’s pace of innovation and its ability to benefit from ongoing trends such as digital transformation, increasing cloud adoption, and a heightened threat environment. They maintained their Buy rating on the stock and even increased their price target from $175 to $200.
Similarly, analysts at Needham also reiterated their Buy rating on the stock and raised their price target to $215 from $200. They highlighted the company’s strong performance in pipeline build goals, which indicates promising growth opportunities in the future.
Bullish Sentiment
Guggenheim Research also remains bullish on CrowdStrike, maintaining a Buy rating and increasing the price target to $191 from $175. According to their report, CrowdStrike still has significant room to penetrate its market, especially in the endpoint security sector where nearly half of endpoints continue to use legacy signature-based technology. The analysts applauded CrowdStrike for redefining and expanding this market over the past decade.
Overall, CrowdStrike’s increased targets for subscription gross margins and operating margins have sparked optimism among investors and industry analysts alike. With its focus on innovation and expanding its security offerings, CrowdStrike is well-positioned to meet future challenges in the evolving cybersecurity landscape.
