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CrowdStrike Rises as Deutsche Sees Higher Security Spending

CrowdStrike was initiated with a buy rating and $265 price target at Deutsche Bank, which says security spending is flowing.
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Shares of CrowdStrike  (CRWD) - Get CrowdStrike Holdings Inc. Report were higher Thursday after analysts at Deutsche Bank initiated coverage of the cybersecurity company with a buy rating and $265 price target.

At last check shares were up 0.4% at $209.05. They've traded on Thursday as high as $215.50, up 3.5%.

"We see CrowdStrike in the sweet spot for two important secular trends of this decade: the rising importance of cybersecurity and cloud adoption," analyst Patrick Colville wrote. 

Investors "are underappreciating the incremental dollars flowing into endpoint security, a total addressable market we peg at $35 billion, with CrowdStrike currently only about 5% penetrated." 

Read More: CrowdStrike Faces a Key Level on the Charts After Earnings

The firm expects CrowdStrike to continue to land big-name new clients like Broadcom  (AVGO) - Get Broadcom Inc. Report, Symantec and McAfee  (MCFE) - Get McAfee Corp. Report.

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Deutsche Bank's industry checks suggest that cybersecurity spending "remains buoyant," as the U.S. and Europe emerge from the pandemic and growth in gross domestic product is expected. 

"Endpoint security is likely to remain a key focus area within cybersecurity, as the traditional network security perimeter is eroded as users and apps increasingly reside outside of the network," Colville wrote. 

Read More: CrowdStrike Wavers; Analysts Laud Cybersecurity Firm's Results

Last month, CrowdStrike reported fourth-quarter non-GAAP net income of 13 cents a share on revenue of $264.9 million. 

Analysts polled by FactSet were expecting fourth-quarter adjusted earnings of 8 cents a share on revenue of $250.6 million.

Analysts at Jefferies said the results were “a great indicator of how impressive this story is, and we don’t see the cyber tailwinds slowing down soon.”