CrowdStrike (CRWD) – Sell-Side Excitement – January 13, 2024

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CrowdStrike (CRWD) – Sell-Side Excitement – January 13, 2024

Sell-siders are lining up to raise price targets and upgrade CrowdStrike’s stock. As always, sentiment follows price, and this share price has been on an absolute tear. Still, the stock is getting very pricy to a point where I’m almost ready to entertain trimming 5%-15% of the position. Its price to EBIT to 3-year EBIT CAGR multiple is quickly approaching 2x, and is one of the most expensive in public markets. It’s not quite to Snowflake or Cloudflare territory, but it is getting there. This company deserves a hefty premium due to its wonderfully rare (1 of 1) mix of growth, scale, margin & sector tailwinds. Still, there could easily come a point in the near future where expensive will get too expensive and I will trim a bit.

I don’t think now is the time to get excited and start a position. Analysts will do whatever they can to justify a higher price target if their previous target has been far surpassed. Even if the business were fundamentally identical to what it is today, but with a lower share price,  aggressively higher price targets wouldn’t be coming like they are now. I don’t like to rain on parades (especially for my holdings), but I do think it’s likely that people who want to own this in the future will get a better deal at some point. I could always be wrong, but I don’t think I am.

Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases

Disclaimer: Third party content is provided for informational purposes only and should not be construed as an offer to sell or a solicitation of an offer to buy or sell any security. Third party content is not intended to serve as a recommendation to buy or sell any security and is not intended to serve as investment advice. Third party content creators are not affiliated with BBAE Holdings LLC, (“BBAE”) Redbridge Securities LLC (“Redbridge Securities”) or BBAE Advisors LLC (“BBAE Advisors”). All investments involve risk, including the possibility of total loss of principal. For additional important information, please click here.

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