In the wake of the COVID-19 pandemic, the cybersecurity landscape has witnessed a remarkable surge in spending, fueled by the widespread adoption of cloud computing and the shift to remote work.
As organizations grapple with new security challenges, the demand for robust cybersecurity solutions has soared. This trend has not only bolstered the sector but also translated into stellar financial performances for many cybersecurity stocks in 2020 and 2021.
Despite facing a bearish market throughout 2022, leading cybersecurity companies have demonstrated resilience, remaining compelling investment options as Cyber Monday is approaching.
Picks for you
CrowdStrike (CRWD)
CrowdStrike (NASDAQ: CRWD), with a 19% market share in security sales, has rapidly emerged as a key player in the cybersecurity landscape thanks to its cutting-edge Falcon platform driven by machine learning (ML) and artificial intelligence (AI).
A recent demonstration of its prowess was evident in the company’s participation in the MITRE Engenuity ATT&CK Evaluation. This assessment gauges an organization’s cybersecurity capabilities, and CrowdStrike showcased exceptional performance, securing perfect 100% scores across key metrics.
CrowdStrike’s perfect results were an industry first, stopping all 13 protection scenarios from an attack that emulated the tactics of a recent Russian-based adversary, Turla.
Although delving into the technological intricacies of CrowdStrike’s operations might require a certain level of expertise, the company’s financial performance tells a compelling story.
Since its initial public offering (IPO) in 2019, CrowdStrike has experienced a remarkable tenfold increase in sales. Its impressive client base includes over 50% of the Fortune 500 and 15 out of the top 20 US banks.
Client retention rate above 120%
CrowdStrike’s sales growth is unique because it’s driven by a balance between new customers and increased spending from existing ones.
In Q2, half of its 37% sales growth came from new customers, while the other half came from existing customers spending more and a net retention rate above 120% for 19 straight quarters, CrowdStrike is consistently getting customers to add new cybersecurity modules as they grow.
Management predicts the company’s annual recurring revenue (ARR) to rise from $2.9 billion in its most recent quarter to $10 billion over the next five to seven years.
As investors await further insights, CrowdStrike is set to report its Q3 results on November 28 at 2:00 pm PST, providing a crucial update on its continued financial performance and market trajectory.
What do the experts think?
A synthesis of projections from 33 analysts on TipRanks over the previous quarter indicates a 12-month average price target of $203.8 for CrowdStrike.
This suggests a potential decline of 2.9% from its current price of 210.66, yet an overarching ‘Strong Buy’ recommendation. Based on the last three months’ rating, CRWD has received 32 ‘Buy’ ratings, 1 ‘Hold’ rating and notably 0 ‘Sell’ rating.
The highest price target for the stock is $240, meanwhile the lowest price target is $167. While the expert prediction is not very optimistic in the short term, the company holds great potential in the longer timeframe.
Microsoft (MSFT)
Even among the pool of soaring growth stocks, Microsoft (NASDAQ: MSFT) stands out as an outsized winner in this market.
The software giant has a $2.8 trillion market capitalization and has gained 60% so far in 2023, compared to a 17% boost for the S&P 500 and a 35% spike in the tech-heavy Nasdaq Composite Index.
Microsoft’s revenue is driven by a number of factors, including its cloud computing business, productivity and business processes business, personal computing business, and gaming business.
In fiscal year 2023, Microsoft’s cloud computing business generated $56.5 billion in revenue, accounting for 27% of the company’s total revenue. And its productivity and business processes business generated $63.4 billion in revenue, accounting for 30% of the company’s total revenue.
The gaming business generated $50.4 billion in revenue, accounting for 24% of the company’s total revenue. This segment includes the Xbox gaming platform and other gaming products and services such as Xbox Game Pass and Activision Blizzard games.
With the festive season approaching, PlayStation 5 sales are expected to surge as they are a preferred Christmas present. The current average daily sales of over 40,000 units are likely to ramp up significantly, driven by increased consumer spending and the allure of new game releases.
What do the experts think?
A synthesis of projections from 33 analysts on TipRanks over the previous quarter indicates a 12-month average price target of $410.03 for Microsoft.
This suggests a potential increase of 8.6 % from its current price of, and receives ‘Strong Buy’ recommendation. Based on the last three months’ rating, MSFT has received 32 ‘Buy’ ratings, 1 ‘Hold’ rating and notably 0 ‘Sell’ rating.
The highest price target for the stock is $450, meanwhile the lowest price target is $375.
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