CRWD's Technical Analysis Points to Bullish Momentum and Potential Pullback

StockInvest.us, 1 month ago

CrowdStrike Technical Analysis of CrowdStrike Holdings, Inc. (CRWD)

CrowdStrike Holdings, Inc. (Ticker: CRWD) closed the last trading session at $290.54, marking a notable upward change of 2.62% from its previous close. This increase continues CrowdStrike's bullish momentum, as highlighted by the recent high of $290.85, which is also its 52-week high. The stock's price movement has consistently outrun both its 50-Day Moving Average ($238.72) and 200-Day Moving Average ($174.21), signaling a sustained uptrend. The Relative Strength Index (RSI) reading of 71 indicates that CRWD may be approaching overbought territory, which could hint at a potential pullback or consolidation in the short term if investors begin to take profits.

The Moving Average Convergence Divergence (MACD) stands at 5.51, reinforcing the stock’s bullish trend over the past three months. However, given the Average True Range (ATR) of approximately 2.76, the stock may exhibit volatility in the upcoming sessions. Volume stands just below the average at approximately 2.99 million, which suggests that the latest price movement is credible and not due to thin trading.

The absence of a well-defined resistance level could provide an opportunity for CRWD to explore new price highs. Nevertheless, the stock's stop-loss level is calculated at around $280.14, enshrining a potential floor and a strategic point for investors to manage risk. Support is established at $273.77, which may be tested if a pullback occurs.

Fundamental Analysis of CrowdStrike Holdings, Inc. (CRWD)

Examining the fundamentals, CrowdStrike operates with a markedly high Price to Earnings (PE) ratio of -4842.33, which is typically considered unattractive. However, this metric may be skewed due to the company's reported negative EPS of -$0.06, highlighting that they are not currently profitable. Despite this, the market capitalization stands robust at approximately $69.93 billion, reflecting substantial investor confidence in the future prospects of the company.

The stock's discounted cash flow (DCF) valuation of $30.68 may raise concerns as it suggests a disparity between current market price and intrinsic valuation, indicating that the stock could be overvalued based on its future cash flows.

CrowdStrike Analyst sentiment, as reflected in consensus estimates, presents a mixed outlook with a high target of $330 and a low target of $145. The median target approximates at $224, which is notably beneath the current trading price, possibly signaling that the stock is overextended.

The recent bullish news underscores CRWD as a "strategic pick" and a stock with "strong momentum," aligning with the promising outlook for hypergrowth tech stocks and the positive sentiment for U.S. stocks heading into 2024. These narrative-driven endorsements may continue to influence investor optimism and drive demand for CRWD shares.

Stock Performance Predictions

For the next trading day, the technical indicators suggest a cautious approach due to the high RSI, although the prevailing bullish trend may very well continue. For the upcoming week, barring any significant industry or market shifts, CRWD could experience some price fluctuations with a bias towards upside movements, keeping in mind the potential volatility indicated by the ATR.

Overall Evaluation and Recommendation

Taking into account the technical momentum and growth-oriented investor sentiment, versus the questionable fundamental valuation, it seems appropriate to classify CrowdStrike Holdings, Inc. as a 'Hold' at this juncture. While the stock exhibits significant growth potential and a strong market position in the cybersecurity sector, the current high valuation and the likelihood of short-term pullbacks due to overbought conditions merit a cautious stance. Investors already holding positions may benefit from the momentum, whereas potential buyers should look for a more attractive entry point, especially if a pullback toward support levels occurs.

Investors should keep an eye on the upcoming earnings announcement on March 5, 2024, which may provide additional insights into the company's profitability and growth trajectory, potentially impacting the stock's valuation and future performance.

Check full CrowdStrike forecast and analysis here.