Analysts are impressed with the financial results and company commentary from CrowdStrike Holdings Inc
The company's impact from the update that caused the Microsoft outage is viewed as less impactful than analysts originally forecasted.
The CrowdStrike Analysts:
- Goldman Sachs analyst Gabriela Borges maintained a Buy rating and a $295 price target.
- Cantor Fitzgerald analyst Yi Fu Lee reiterated an Overweight rating and lowered the price target from $400 to $350.
- BMO Capital Markets analyst Keith Bachman reiterated an Outperform rating and raised the price target from $290 to $315.
- Truist analyst Joel Fishbein reiterated a Buy rating and $325 price target.
"Early commentary suggests temporary not structural slowdown," Borges said.
The analyst said CrowdStrike expects $60 million in deal value pushed out of the second quarter, a $30 million impact to subscription revenue in the third and fourth quarters and a high-single-digit millions impact to professional services in the second half.
Company guidance shows these impacts along with a broader slowdown, the analyst added.
"CrowdStrike noted that customer engagement is high post the incident."
The company also said several deals have closed since the July 19 incident, Borges added.
"We believe it is executing a thoughtful playbook on transparency and engagement to regain its footing within customers after several years of industry leadership."
Cantor Fitzgerald on CRWD: The company reported a strong second quarter, Fu Lee said in a new investor note.
The analyst said CrowdStrike has a path to recovery from the July 19 outage.
"The path to recovery begins with customers' support and trust," Fu Lee said.
CrowdStrike's second-quarter results showed consistency from past quarters and why the company is the best in the industry, Fu Lee added.
"We are positive on how CrowdStrike's team handled the channel file disruption, providing continuous support to customers and full transparency to get them up and running speedily."
Fu Lee said CrowdStrike's report and commentary shows the company is not seeing significant churn, as some competitors have suggested.
The analyst praised CrowdStrike's strategy of offering customers discounts in exchange for long-term contract commitments.
The legal exposure from the Microsoft outage is still too early to be determined the analyst said.
"Customer contract agreements specify a limit on the liability, and CrowdStrike maintains insurance policies to mitigate this risk along with a net cash balance of +$3 billion."
Fu Lee said it is "mission-critical for CrowdStrike to execute like never before."
"The path to normalcy will require courage, intelligence, and putting in the hard work to regain the trust of customers/investors."
BMO Capital Markets on CRWD: The earnings report from CrowdStrike and company commentary was better than feared for Bachman.
"CRWD's FY25 revenue outlook is less impacted by the outage than we expected, though we think management's guide and our estimates likely contain more uncertainty than in past years," Bachman said.
The analyst said CrowdStrike may be using a strategy of more bundling to win customers and sustain its growth.
"Management's expected impact from the outage is more muted than we envisioned, and we believe that CRWD has navigated the situation well thus far."
Bachman said CrowdStrike's valuation is attractive given the company's "long-term growth potential" after the near-term outage headwinds.
Truist on CRWD: Better than expected revenue, operating income and free cash flow were highlights in the second-quarter results for Fishbein.
"We continue to be encouraged by the strength in CRWD's underlying business, despite the incident causing deals slippage," Fishbein said.
Fishbein said he's encouraged by CrowdStrike's underlying business in the second quarter.
"The doomsday scenario of customers fleeing to competitors did not come to fruition as the company continued to execute despite the headwinds with minimal customer churn."
CRWD Price Action: CrowdStrike shares are up 5% to $277.40 on Thursday versus a 52-week trading range of $145.49 to $398.30. CrowdStrike shares are up 14% year-to-date in 2024 and up over 90% in the last year.
