New CrowdStrike Price Target as Long Rally Reaches Late Stages
The best-in-class cybersecurity name is preparing to release its latest results amid an impressive run.
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Know who hasn’t reported yet? Long-time Sarge-folio fave CrowdStrike Holdings (CRWD), that’s who.
The “best in class” (my opinion) cybersecurity platform provider has been on a run going into earnings. The stock is up 146% since its April low and up 28% since late July. The firm will release its fiscal second quarter financial results on or about August 26. Yes, that’s “Jackson Hole” week.
For the period to be reported, Wall Street is looking for an adjusted EPS of $0.29 on revenue of roughly $1.44 billion. Numbers like that would compare to the $0.23 reported for the same period last year on sales growth of better than 23%. Interestingly, of the 44 sell-side analysts that I know to cover this stock, 25 have revised their earnings estimates to the upside since the start of the quarter, and 13 have revised their numbers lower. Six analysts either aren’t really paying attention or really do not see a reason to update their respective estimates. Let’s go to the chart…
The Chart
Readers will see that through the later stages of this long rally, the shares of CRWD have developed what looks to be a rising-wedge pattern of bearish reversal. Is something about to break? Ahead of the digits? The shares have hit resistance at the upper trendline of the wedge for four days in a row. This would, in theory, be where the potential for a sell-off would be the greatest.
However, this spot also now becomes the upside pivot. Remember, when a bearish setup breaks in a bullish direction (or vice versa), the move is often exaggerated. That means that we could be at the precipice of an almost parabolic move to the upside given the recent trajectory of the share price.
Do I know what breaks from here? No. Am I selling shares of this stock at this level? Not a chance. Relative strength is quite robust, but not technically overbought. That’s bullish. The daily MACD is looking bullish across all three components. I’m thinking that we may have a ballgame here.
Target Price: $285
Pivot: $228 (upper trendline)
Add: down to 50-day SMA (around $189)
Panic: Loss of lower trendline.
At the time of publication, Guilfoyle was long CRWD equity.
