CrowdStrike wins huge price target raise at Roth

Roth Capital Partners analyst Taz Koujalgi says CrowdStrike’s (CrowdStrike Holdings Stock Quote, Chart, News, Analysts, Financials NASDAQ:CRWD) first-quarter results were solid, but its larger-than-expected increase to full-year ARR guidance has raised questions about how much upside remains.

In a June 4 update, Koujalgi maintained his “Buy” rating and raised his target on CrowdStrike to $785.00 from $510,.00, reflecting recent expansion in market multiples. His new target is based on 70 times his calendar 2027/free cash flow estimate.

Koujalgi said the premium valuation is justified by CrowdStrike’s broad portfolio, competitive position and high growth at scale in the security sector. He is modelling revenue growth of about 23% in calendar 2027.

CrowdStrike reported first-quarter fiscal 2027 revenue of $1.39-billion, up 26% year-over-year and ahead of Street expectations of about $1.36-billion. Subscription revenue of $1.32-billion also topped the Street at $1.30-billion.

Net new annual recurring revenue was $256-million, above guidance and Street expectations of about $250-million, but below buyside expectations of about $275-million. Koujalgi said the ARR beat of about $6-million was one of CrowdStrike’s lightest in recent quarters.

Operating margin was 23.5%, ahead of the Street at 22.7%, while operating cash flow was $591-million, compared with consensus at $568-million.

CrowdStrike guided second-quarter revenue to between $1.436-billion and $1.442-billion, ahead of the Street at $1.430-billion. It also raised its full-year revenue guidance to between $5.915-billion and $5.959-billion from its previous range of $5.868-billion to $5.928-billion.

The company also raised its fiscal 2027 ARR guidance to between $6.532-billion and $6.556-billion, up about $58-million at the midpoint. Koujalgi said that increase was meaningfully larger than the first-quarter beat and may limit future upside to the revised outlook.

“A very light beat offset by a big raise,” he said.

Koujalgi said CrowdStrike’s ARR momentum was broadly consistent with the previous quarter, supported by both endpoint and emerging products. AI adoption remains early, but management called out a roughly $50-million pipeline for its AIDR product.

He said the company’s second-quarter ARR guidance implies net new ARR growth of about 11% sequentially, below the typical second-quarter seasonal range of about 13% to 15%. That has contributed to investor concern that the updated guide may be aggressive.

Still, Koujalgi said CrowdStrike remains one of the strongest growth stories in security, with a broad platform, sustained demand and healthy free cash flow. The company maintained its fiscal 2027 free cash flow margin outlook at about 30% and raised its operating margin guide to 24.7% from 24.4%.

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