Institutions Are Accumulating Crowdstrike
Insider selling in shares of Crowdstrike (NASDAQ: CRWD) was a worry earlier in the year but that worry seems to be passing. While insiders have made 83 transactions this year the sales are broad across execs, directors, and large shareholders and coincide with the post IPO highs set last year and earlier this year. In that light, the sales are more consistent with regular profit-taking by early investors and individuals that receive share-based compensation. The key takeaway here is that total insider selling over the last month amounts to less than 1.0% of the shares and insiders are still in control of 8.65% of the stock.
More to the point, Insdiertrades.com indicates institutions are accumulating shares of Crowdstrike and may use the latest pullback in prices to add to their holdings. Institutions have been net buyers over the past 12 months and now hold more than 61% of the stock. With revenue and earnings outpacing expectations, we will be very surprised to see institutions begin shedding this stock.
Crowdstrike Beats Consensus And Raises Guidance
Crowdstrike’s Q3 results are very strong but not surprising given the strength of results produced by other digital security companies. The company reported $380.05 million in net consolidated revenue which is good for a gain of 63.5% over last year and beat the consensus by 435 basis points. The beat isn’t large but it is versus a very high bar so worth taking note of. What’s also worth taking note of is the 67% increase in ARR that suggests revenue growth is still accelerating. In terms of subscribers, the company added more than 1600 new subscribers for the 2nd consecutive quarter and we don’t see this momentum ending for several quarters at least.
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Moving down the report, the company’s GAAP loss was more than expected but that is due to marketing, R&D, and compensation packages. On an adjusted basis, the margin improved by 100 basis points to deliver much better than expected earnings. The GAAP EPS of -$0.22 missed by $0.04 while the adjusted $0.17 more than doubled from last year and beat by $0.07.
The best news is the guidance, however, which indicates momentum is expected to continue into the end of the year. The company’s Q4 and full-year EPS guidance are both above consensus and could be cautious estimates given the momentum we’re seeing in the industry.
The Analysts Like Crowdstrike
The analysts have yet to speak out about Crowdstrike’s Q3 results but the general sentiment is bullish. The latest in a string of shout-outs came from Deutsche Bank which maintained a Buy rating but lowered the price target to $300. That compares with the consensus price target of $290 which implies at least 40% of upside is available in this stock. The high price target of $360 assumes about 75% of upside is still in store.
The Technical Outlook: Crowdstrike Might Be Bottoming
Price action in Crowdstrike has been in a correction for the last couple of weeks but that might be over now. The price action popped more than 2.5% in the wake of the Q3 report and is indicated higher in early premarket trading. If the market can follow through on this move we see it moving above the $220 level fairly soon. If not, shares of Crowdstrike could retreat down to the $180 level before finding firm support. Regardless, insider trading is not hurting this market.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| CrowdStrike (CRWD) | $282.64 | -3.9% | N/A | 785.13 | Moderate Buy | $371.87 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
