HomeMarket NewsChoosing the Champion: A Deep Dive into CRWD vs. PANW

Choosing the Champion: A Deep Dive into CRWD vs. PANW

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The swell in cloud computing and interconnected devices has unfurled a deluge of cyber threats globally. In the wake of escalating cyberattacks and mounting threat sophistication, the cybersecurity sector has burgeoned steadily.

This expansion is set to persist, with Gartner anticipating a 14.3% surge in global cybersecurity expenditure this year, reaching a noteworthy $215 billion. Moreover, projections indicate a 13.8% CAGR propelling the global cybersecurity market to a revenue of $424.97 billion by 2030.

Within this dynamic landscape, prominent cybersecurity entities like CrowdStrike Holdings, Inc. (CRWD) and Palo Alto Networks, Inc. (PANW) have seized the spotlight, beckoning investors keen on riding the industry’s momentum.

Up 28% year-to-date, CRWD outshone expectations, trouncing Wall Street projections with its Q4 performance and offering bullish guidance. Conversely, Palo Alto Networks faltered, slashing its fiscal 2025 forecasts. While PANW saw a fleeting surge post U.S. Representative Nancy Pelosi’s revelation of a PANW call options purchase worth $1.25 million on Feb. 26, the stock has since receded, down 2.5% year-to-date.

In this bout, which cybersecurity contender is poised for a stellar run ahead? Let’s embark on a discerning exploration.

Decoding CrowdStrike Holdings Stock

Hailing from Austin, Texas, CrowdStrike Holdings, Inc. (CRWD) stands tall as a premier global cybersecurity entity revolutionizing security with its cutting-edge cloud-native platform. Fueled by artificial intelligence (AI) and the CrowdStrike Security Cloud, the CrowdStrike Falcon platform enforces real-time threat detection, automated defense, and swift deployment, streamlining operations for immediate impact. Currently boasting a market cap of $79.76 billion, CRWD has seen its shares catapult by an astounding 156.7% over the past 52 weeks, vastly exceeding the S&P 500 Index’s modest 32.3% climb.

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Currently, the stock trades at 288.33 times forward earnings and 25.88 times sales, commanding a considerable premium over peers like PANW and Workday (WDAY). While PANW trades at 102.23x forward earnings and 13.35x sales, Workday’s valuation multiples stand at 145.75x and 9.83x, respectively.

CrowdStrike: Exceeding Expectations

CrowdStrike’s buoyant earnings performance has been a pivotal propellant for its robust year-to-date price trajectory. Notably, Q4 revenue surged 33% year-over-year to $845.3 million, outshining the consensus estimate of $840 million. The Annual Recurring Revenue soared to $281.9 million.

Displaying remarkable growth, non-GAAP operating income scaled to $213.1 million, while non-GAAP net income more than doubled to $236.21 million, equivalent to $0.95 per share, outpacing the Wall Street target of $0.82 per share.

Looking ahead to fiscal 2025, CrowdStrike anticipates fervent demand, forecasting a revenue range of $3.92 billion to $3.98 billion, indicating a robust 29.9% revenue surge for the forthcoming year. Projections place non-GAAP operating income between $863.6 million and $913 million, with non-GAAP EPS set to range from $3.77 to $3.97.

With an overarching consensus “Strong Buy” rating, CRWD garners favor across the board. Out of 40 analysts tracking CRWD, 35 advocate a “Strong Buy,” three lean towards “Moderate Buy,” and two suggest “Hold.”

Following the lauded earnings release, CRWD attracted a slew of price target upgrades from various analysts. Currently, the average analyst price target for CrowdStrike stands at $389.87, signaling a potential 18.6% upside. Notably, the loftiest Street target price of $435 implies a substantial 32.3% potential upside.

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The Argument for Palo Alto Networks Stock

Another stalwart in the cybersecurity realm, Palo Alto Networks, Inc. (PANW), headquartered in Santa Clara, boasts a diverse suite of security solutions encompassing firewalls, cloud security, URL filtering, and advanced threat prevention. With a multifaceted product lineup bolstering its revenue streams, PANW commands a market cap of $93.74 billion.

Over the past 52 weeks, PANW has delivered a respectable 55.9% return.

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Traded at 102.23 times forward earnings and 13.35 times sales, Palo Alto Networks is valued at a discount compared to CRWD. Nevertheless, PANW’s growth outlook for the upcoming year pales in comparison to its cybersecurity peer.

Palo Alto Networks: Navigating Revenue Projection Cuts

For fiscal Q2, Palo Alto Networks surpassed estimates, with revenues hitting $1.98 billion, topping the consensus of $1.97 billion. Earnings surged approximately 1.5 times to $504.7 billion, equivalent to $1.46 per share, eclipsing the Wall Street projection of $1.30 per share. The company also raised its full-year non-GAAP EPS guidance for fiscal 2024 to a range of $5.45 to $5.55, up from the previous forecast of $5.40-$5.53.




Insights into Palo Alto Networks’ Stock Performance

The Tale of Palo Alto Networks Stock: Bears and Bulls Clash

Despite a meteoric rise usually associated with SpaceX rockets, shares of Palo Alto Networks took a nosedive into uncertainty. The company sent shockwaves through the market after a revision of its full-year guidance, citing concerns over the whims of customers’ IT budgets. The outlook shift sent ripples across the industry, forecasting revenue to a range between $7.95 billion and $8 billion, significantly lower than previous estimations in the ballpark of $8.15 billion and $8.20 billion. Billings were not spared either, being reined in to a range between $10.1 billion and $10.2 billion.

Arora’s Strategic Shift and the Thunderdome Project

CEO Nikesh Arora sprang into action, attributing this altered trajectory to a strategic overhaul designed to supercharge growth, streamline the platform, and ignite leadership in artificial intelligence. In a moment of candid transparency, Arora hinted at an imminent tough nut to crack, attributing the upcoming challenges to a ‘difficult customer’ landscape brought about by such transformational shifts.

According to Wells Fargo analysts, the flickering flame of hope at the end of this tunnel is primarily tied to the esteemed Defense Information Systems Agency’s mammoth $1.86 billion Thunderdome project. In a tale reminiscent of David and Goliath, the fate of Palo Alto Networks hangs in the balance, awaiting the windfall from this ambitious endeavor.

PANW Stock: A Rollercoaster Ride

Like a seasoned surfer riding the crest and trough of a monumental wave, the stock of Palo Alto Networks staged a modest recovery post-earnings frenzy. The news of Nancy Pelosi’s calculated maneuver, disclosing a PANW call option purchase, injected a shot of adrenaline, mildly alleviating the company’s post-guidance blues. However, the stock remains scarred, down by more than 21% from its pre-earnings zenith, a sight that would make even the sturdiest investor flinch.

Wall Street’s Verdict on PANW

At least 12 analysts clutched their pearls and slashed their price targets on Palo Alto stock post-earnings, as the consensus on Wall Street underwent a metamorphosis from ‘Strong Buy’ a mere month ago to a more tempered ‘Moderate Buy.’ In the ongoing melodrama of analyst ratings, out of the 40 analysts scrutinizing PANW, 27 fervently chant ‘Strong Buy,’ two prefer a ‘Moderate Buy,’ while the remaining fraction adopts a more cautious ‘Hold’ stance.

Crunching the Numbers: PANW Potential Upside

The average analyst price target for Palo Alto Networks is set at $333.55, dangling a tantalizing carrot of a potential 15.9% upside from current levels. For the brave souls dreaming of loftier heights, the Street-high target price stands tall at $420, whispering promises of a staggering 44.8% upside potential over the forthcoming 12 moons.

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CRWD vs. PANW: Battle of the Titans

Amidst the clamor and chaos, as the dust settles, the eternal question surfaces – CRWD or PANW: which horse do you back in this precarious race? While both contenders sport premium price tags, CRWD emerges as the dark horse, flaunting a stronger earnings performance and reassuring guidance for the year to come. On the flip side, PANW’s crystal ball appears murky, casting shadows of doubt on the minds of investors, despite Pelosi’s symbolic gesture of trust.

Coupled with the resounding symphony of analysts jacking up their price targets, the scales appear to tip in favor of CrowdStrike stock, beckoning with promises of greater upside potential compared to the ruffled feathers of PANW in the current scenario.

On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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