This quarter could be the most important earnings season for the US stock market this year; The entire year 2024 proceeded smoothly quarter after quarter until it caused some concerns in the technology sector. In particular, problems associated with the semiconductor industry and artificial intelligence, where the cybersecurity vertical is involved by default and by association. Here’s the share CrowdStrike Holdings Inc. NASDAQ: CRWD may come into play.
Crowdstrike today
(As of 11/29/2024 5:27 PM ET)
- 52 week range
- $200.81
▼
$398.33
- P/E ratio
- 678.39
- Target price
- $355.80
After experiencing system outages over the last two quarters, CrowdStrike shares suddenly sold off and rebounded just as quickly when investors and the broader markets found no significant change in the company’s profitability since the incident. However, the situation has not yet been resolved, since everything connected with technology today is in conflict with one conflict or another.
Now that CrowdStrike is set to report its quarterly earnings in a few days, investors may be wondering what the implications may be in the future. While bets on earnings direction can be speculative at best, there are ways to gauge what the market thinks, or at least expects, of a particular stock in the coming quarters, so here’s CrowdStrike’s take.
CrowdStrike Stock Poised for Breakout: Market Signals Point to New All-Time High
Two indicators and factors usually influence the price of a stock, whether it is higher or lower. The first one that is most commonly observed and understood is a company’s earnings per share (EPS), which may make more sense to investors than anything else.
However, the second factor is abstract and concerns how the markets perceive these earnings, especially earnings per share forecasts. To start measuring this perception, investors can look at a stock’s forward P/E ratio relative to its peers to get a sense of how much the markets are willing to pay for future growth and why.
As for CrowdStrike stock, investors see that Wall Street analysts now expect to see EPS growth of up to 17.3% over the next 12 months. Compared to the Internet Software sector’s average EPS growth rate of 13.5%, CrowdStrike stock is starting to stand out among its Software sector peers.
Now that investors know what CrowdStrike’s EPS is likely to deliver next year, it’s time to evaluate how the market feels about that forecast today. Trading at a forward P/E of 83.5x, the stock commands a huge premium compared to the sector’s average valuation of 49.4x today.
Some investors would call this expensive, while others understand that the stock market is quite willing to overpay for stocks that are expected to deliver above-average growth rates. In this case, CrowdStrike fits the description. As optimistic as this may be, it is only half the equation for determining the future path.
The other half is about what other market participants, such as institutions and Wall Street analysts, might think about CrowdStrike stock in the future.
Market Forces Converge for CrowdStrike: New Stock Rally on the Horizon
CrowdStrike Stock Forecast Today
$355.80
Growth potential 2.84%Moderate purchase
Based on ratings from 43 analysts
| High forecast | $424.00 |
|---|---|
| Average forecast | $355.80 |
| Low forecast | $265.00 |
CrowdStrike Stock Forecast Details
What Wall Street and others are saying is consistent with the fact that the broader markets are willing to overpay for CrowdStrike stock today, with the bearish side of the market having to come in first if they really believe in it. shares may fall.
However, this is not the case, as short interest in CrowdStrike stock is down as much as 10% in the last month alone, a clear sign of a bearish capitulation in the middle of what is proving to be compelling evidence that the company is in double digits. growth potential lies ahead in the coming quarters.
To further highlight the momentum provided by short sellers closing out their positions, Wall Street analysts also came out to weigh in on the stock. Especially those at JMP Securities, which recently reaffirmed their Outperform rating on the company’s stock, this time pairing their view with the company’s $400 price target.
These estimates now suggest a net upside of up to 12% from today’s levels, not to mention a new all-time high that would clear most – if not all – of the blame for the tech sector and related verticals. The icing on the cake for investors catching on to this trend is institutional buying.
State Street officials decided to increase their holdings in CrowdStrike shares by as much as 2.9% as of November 2024, bringing their net investment today to $2.7 billion, or 3.9% ownership in the company.
Overall, investors could probably guess that the earnings implications for CrowdStrike are positive and optimistic.
You might want to hear this before you consider CrowdStrike.
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