This cybersecurity stock is breaking out as industry rides the AI boom, according to the charts
Crowdstrike (CRWD) is a best-in-class cybersecurity leader that is poised for a technical breakout from resistance, despite being richly valued. Cybersecurity has a few big trends behind it. One of the top concerns for firms in a post-pandemic world of remote, at-home workers is cybersecurity. Plus, the industry will also benefit greatly from the generative AI and cloud computing boom. Looking at the 12-month Relative Rotation Graph of CRWD plotted against the other major cybersecurity companies you can see the CRWD is farthest to the right and highest on the vertical scale. This indicates that CRWD over the past 12-months is showing the best relative strength and relative momentum compared to the other names in the industry, as well as the benchmark S & P 500. Notice how Palo Alto Networks (PANW) hooked down and to the left about to exit the leading quadrant. Morgan Stanley just published an outlook that the CRWD market cap could go from current levels of $85 billion to $100 billion, raised the price target to $422 from $372, and maintains their overweight status. Does that price target fit within the technical outlook for the stock? According to Elliott Wave analysis, we see the stock moving higher in ‘wave circle v’ of higher degree ‘wave 3’ targeting an upside cluster of Fibonacci ratios ranging from $410 to $544 in the next 6 to 12 months. We see Morgan’s target as a bit on the conservative side. The stock did come under a little pressure and has since consolidated since last week when competitor Palo Alto Networks reported earnings that beat top and bottom line expectations, but the guidance was lower than what analysts expected. Crowdstrike is set to report 56% EPS growth next week. And the long-term outlook for cybersecurity stocks is quite bullish as we power into what Nvidia’s Jensen Huang refers to as ‘the next industrial revolution’. Crowdstrike is one of the many names that could lead us safely through this revolution. We hold a 2% allocation in our Tactical Alpha Growth portfolio at Inside Edge Capital. We increased the holding by 50% on our last rebalance, and will look to again increase exposure. -Todd Gordon, founder of Inside Edge Capital, LLC DISCLOSURES: (Gordon owns CRWD personally and for his wealth management company Inside Edge Capital Management, LLC Charts shown are MotiveWave and Optuma.) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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