Favorable Analyst Coverage on CrowdStrike Might Not Be Enough

Technology

Published: July 8, 2019 4:07 pm

Last Updated: January 11, 2020 7:59 am

CrowdStrike Holdings Inc. (NASDAQ: CRWD) entered the fray of the hot initial public offerings in June, and now the enforced quiet period has ended and analysts at the underwriting syndicate firms have been freed up to initiate coverage on the cybersecurity company. While the shares were up initially, a weak market on Monday, July 8, 2019 acted to pull its shares lower despite some upside and optimism.

CrowdStrike priced its IPO above-range at $34 per share, and the 18 million shares at that price was set to raise more than $610 million, for an initial valuation of about $6.7 billion. Its shares basically doubled during its first trading session but eventually did pull back to under its opening price of $63.50.

While the focus is in the hot endpoint detection and response portion of cybersecurity, the field is crowded and full of much larger players like Palo Alto Networks and FireEye. Even Cisco and Microsoft can be counted as competitors.

Wall Street looked at the recent closing price of $67.21 as an opportunity based on the post-IPO trading range of $56.00 to $79.79.

Needham started it with a Buy rating and an $80 price target, calling it one of the premier native cloud security platforms and a cornerstone of a Cloud Federated Security model and a cornerstone of a Zero Trust Security architecture.

Barclays started it as Overweight and assigned an $80 price target. Merrill Lynch started the shares with a Buy rating, but with a $75 price objective.

JMP Securities initiated coverage as Market Outperform with an $80 target price, while Macquarie assigned an Outperform rating and $75 target price and Mizuho started it with a Buy rating and an $80 target as well.

Piper Jaffray initiated it with an Overweight rating and issued a $75 price target. Stifel started it with a Buy rating with an $80 target price.

Not every analyst was positive on CrowdStrike, though. Credit Suisse assigned a Neutral rating and a $70 per share price target. SunTrust Robinson Humphrey gave it only a Hold rating and $69 target.

Investors had focused on the Buy and Outperform ratings more than the cautious ratings on Monday morning, but a 0.5% drop in the broader markets pulled its shares lower. CrowdStrike had been up 4.4% at $70.15 in midday trading, but the stock ended up closing down 0.45% at $66.91 on more than 4.3 million shares. CrowdStrike still has a $13.15 billion market cap.