CrowdStrike "Underappreciated?" Analyst Sees CRWD Sell-Off "Overdone" into Earnings

0:00We're back from Morning Trade Live. Let's focus on cybersecurity, crowd strike, and set to report earnings tomorrow afternoon. The street is expecting a just to be a piece of $1.10 on revenue of $1.3 billion. The stock and other cybersecurity names have been caught up in this year's so-called SaaS Pocca Lips or SaaS Care, whichever you choose. CrowdStrike is down 20% in 2026. Palo Alto Networks is down almost 20% as well, and Zscaler is off by 35% this year. So joining us for a closer look at this is Marley Kaden. Very good morning to you, Marley. So one analyst turning bullish on CrowdStrike ahead of its report. Just talk us through exactly what's behind that call. Good morning to you, Sam. Yes, a bullish analyst, Piper Sandler, upgrading CrowdStrike to overweight from neutral, unchanged price target of $520. Right now, even with this 3 plus percent moved to the upside trading at 383.93. So a pretty substantial upside potential here. The analyst in question saying that the stock being down more than 20% year to date on concerns of this impact of AI

1:01that resulted in the sell-off is overdone. Said this is a quote which I thought was really interesting. AI-driven bear cases have subsumed the narrative insecurity. A move we see as well overdone for a best in class security platform with a durable track record of innovation and execution. We acknowledge the valuation remains elevated versus peers, but believe the opportunity ahead in ability to execute warrant this premium. As investors weighed back into the space, we expect them to turn to leadership first. And they believe CrowdStrike is that leader delving deeper. The analyst went on to say that he believes AI is an opportunity for CrowdStrike and not a replacement. It shouldn't be caught up in the sassacre here. He says it should simultaneously create the next multi-billion dollar security opportunity as enterprises look to secure a new attack surface. He thinks that leaders like CrowdStrike are well positioned to capture that opportunity over the coming years. There's another aspect to this upgrade as well. It's the belief that the cybersecurity consolidation is a major tailwind for CrowdStrike

2:02given the fragmented nature of the market and CrowdStrike's role as a consolidator. So instead of it being this fear and the we're seeing the sell off, he actually thinks that CrowdStrike's going to benefit. The company has spent about $1.4 billion on acquisitions over the past six months and is likely to continue doing so, especially in the identity area, which the firm says they believe, quote, has gone underappreciated by investors to date. That's not the only analyst action today. BTIG came out maintaining a buy rating, but lowering their price target down from $6.40 to $4.99. So still implying an upside here, but a pretty significant drop in that price target. Of the 49 analysts that cover CrowdStrike right now, 31 have a buy rating, 15 have a hold, and three have a sell. They've also seen several upward revisions to their earning estimates ahead of earnings, which of course you mentioned are coming tomorrow after the close. Yeah, and I mean, it's interesting because these cyber security firms have actually benefited from obviously the work that they do to try to address the threats coming from artificial intelligence,

3:04but that hasn't stopped them obviously from being sort of immune. I mean, they've still been vulnerable in this whole Southpocalypse as well, but as you say, perhaps fairing a little bit better than their fast peers, but really appreciate the breakdown, Marley. And what the analysts are saying about this one ahead of its earnings, let's trade it now with Charles Boone, stock strategist at Prosper Trading Academy. Very good morning to Charles. Just talk us through your example trade for this name. You know, normally I typically don't like to just kind of go high risk into earnings, especially to the upside and these cyber security names. They have a tendency of absolutely obliterating estimates and still rolling over Zscaler at great estimates, great numbers and a kind of they were down on earnings. So that's been more of the kind of consistency that we've seen around the sector, but that being said, with the current valuation, you know, this is a situation where I hate to play the upside, but it makes a lot more sense based on the price of the stock. So I'm looking to take a very risky entry.

4:06I'm looking at the 420 strike for this week's expiration. I'd like to buy it at $4. Now the risk is wide. It's going to be 100% of the premium. But if it works out, this stock could actually end up trading greater than the expected move, the expected moves around $30 for this stock. And we could actually see them knocking on the door of around $435 to $440, especially if they get a really positive response and kind of go against the grain as to how they historically perform on earnings. So, you know, this is one of those plays where I just kind of hate playing the upside, but I feel that that's the smarter money right now in terms of opportunity in relation to the implied volatility for earnings. All right. Take a look at CrowdStrike ahead of its earnings. Charles, one of your overall thoughts on these markets, because obviously we saw a bit of a preview tool of this on Friday with that safe haven-type trade. Obviously, now we've had the developments and the escalation in the Middle East. How would you characterize the moves that we're seeing today?

5:06Because it doesn't seem like complete shock. There's some pretty typical, very traditional moves that we're seeing here, but obviously we've seen some moves in the tenure up above 4% right now. Just give us some of your thoughts around some of your takeaways in these markets. Well, you know, for the short-term trader, I got to just say that I think the trading environment has completely changed. And so there's going to be a lot of adjustments. You know, it wasn't, Wall Street definitely wasn't caught off guard. A lot of risk off trading on Friday, but what was really notable was that crude futures was set to open around $3 at the stock market open. They kind of dissipated and pulled back a little bit, but certainly a big rise today and now trading above $70 barrel. And this is something that I guess Wall Street kind of braced themselves based on how the United States was positioned. I guess there's still a lot more fallout to come. This is too early to kind of really anticipate, but I don't think it's going to be as negative for the markets as it may perceive to be.

6:10I think that energy is going to be a play here, especially in that gas. I think that gas could be a really underrated play here over the next couple of weeks. What really kind of caught me off guard really today was the demand for the drone names. I think that's going to be a play to watch over the next two weeks with the utility of all the drones from both sides on, you know, from Iran and from the United States. I think that these stocks are going to be, you know, they've been impacted recently, slumping down, but I think that these are names to watch. They could be big flyers, you know, so to speak over the next week or two. They're great momentum stocks. Retail traders happen to love them. So they're going to be on my radar over the next week or two as well. Okay, drone, something to look at to really appreciate your thoughts this morning. Thanks so much, Charles. Charles Moon, there's Stock Strategist Prosper Trading Academy.