CrowdStrike Holdings, Inc. (CRWD) Shows Solid Technical and Fundamental Strength, Hold Recommendation

StockInvest.us, 1 week ago

CrowdStrike Technical Analysis

CrowdStrike Holdings, Inc. (Ticker: CRWD) closed at $389.68 on July 5, 2024, marking a modest increase of 0.65% and inching closer to its year high of $394.64. The stock showed a daily range between $385.31 and $391.47, indicating some intraday volatility.

The RSI14 at 55 suggests a neutral to mildly bullish momentum, steering away from overbought or oversold conditions. The 50-day moving average is at $344.23, while the 200-day moving average is at $278.13—both well below the current price of $389.68. This indicates a strong bullish trend over medium and long-term horizons.

MACD (3-month) value of 22.25 further supports positive momentum, with the stock showing consistent upward price movement. The Average True Range (ATR) of 3.05 signifies moderate volatility. Immediate support is identified at $380.63, and resistance is slightly higher at $390.43, positioning the stock at a critical technical juncture. A stop-loss at $374.43 provides a near-term safeguarding price point for investors concerned about downward movements.

Fundamental Analysis

Currently, CrowdStrike boasts a market cap of $94.81 billion, underscoring its substantial size in the cybersecurity space. However, its P/E ratio stands at an exceptionally high 721.63, reflecting high investor expectations relative to its earnings (earnings per share - EPS: 0.54). This elevated P/E ratio infers potential overvaluation, suggesting that any earnings shortfall could significantly impact its stock price.

The discounted cash flow (DCF) model estimates an intrinsic value of approximately $360.45, which is below the current market price of $389.68. This discrepancy indicates that, fundamentally, CRWD might be trading above its fair value. Nonetheless, analyst consensus remains bullish, with a median target price of $370 and a high target of $437, reflecting varying degrees of optimism about future performance.

CrowdStrike Recent news paints a mixed picture. Articles flagged potential overvaluation risks, pointing out that the tech sector, including CrowdStrike, has experienced record highs recently. Conversely, positive sentiment highlights CrowdStrike’s sustained platform expansion, impressive sales growth, and strong free cash flow, underscoring its solid position in a growing cybersecurity market.

Next Trading Day and Weekly Prediction

Given the current technical indicators and market sentiment, CrowdStrike’s stock might experience slight upward movement for the next trading day, possibly testing the resistance level at $390.43. Should the stock break past this resistance, a new short-term peak could materialize. Over the upcoming week, the prevalent bullish momentum could sustain the stock above the $380.63 support level, assuming no major market disruptions.

Intrinsic Value and Long-Term Investment Potential

While the high P/E ratio raises valuation concerns, CrowdStrike's robust growth metrics and strategic advancements in cybersecurity present a compelling long-term growth story. The company’s ability to expand its platform and capitalize on growing cybersecurity needs strengthens its competitive moat. For long-term investors, the current overvaluation must be balanced against the potential for continued revenue and margin expansion.

Overall Evaluation

Hold

CrowdStrike positions itself strongly in the cybersecurity domain, allowing for optimistic future growth prospects. However, the current overvaluation signals caution, suggesting that the stock may be more suited for holding rather than fresh purchasing at this juncture. A conservative approach considering current market pricing and inherent growth potential appears prudent.

Check full CrowdStrike forecast and analysis here.