On Monday, Oppenheimer maintained its Outperform rating and $450.00 stock price target on NASDAQ:CRWD, despite removing CrowdStrike Holdings (NASDAQ:CRWD) from its top picks for 2024.
The firm's decision follows recent challenges faced by the cybersecurity company, including a defective software update that led to a global Windows outage. The incident, which has not been fully resolved, could potentially expose CrowdStrike to significant fines, legal action, and impact on business operations.
CrowdStrike Holdings has been under scrutiny after a software mishap caused a widespread Windows system outage. In light of these events, Oppenheimer anticipates a near-term pressure on the company's stock as it navigates through potential repercussions.
These could include a decline in closing rates, increased discounting and customer churn, as well as delays in purchasing decisions. Furthermore, the company's upselling activities might slow down as clients reassess their reliance on CrowdStrike's technology.
The recent software issue has also led to discussions among several Fortune 100 companies about the possibility of switching to alternative vendors, as reported on Friday. This development indicates a growing concern among major clients regarding the reliability of CrowdStrike's offerings.
Oppenheimer notes that the nature of the issue, being a non-breach technical failure, raises questions about liability and damages, which could result in class-action lawsuits. This legal uncertainty is expected to loom over the company and could affect its stock valuation, which is already considered to be at a premium.
Despite these challenges, Oppenheimer holds a long-term positive outlook for CrowdStrike, choosing not to alter its financial estimates or price target at this time. The firm looks forward to gaining more insights during CrowdStrike's second-quarter fiscal year 2024 earnings call, where further details on the company's response to the incident and its implications for business may be discussed.
In other recent news, CrowdStrike Holdings Inc. has faced significant disruptions due to a software update malfunction, affecting a multitude of services worldwide. The cyber outage, caused by an intended update to the company's security software, impacted an estimated 8.5 million Microsoft (NASDAQ:MSFT) Windows devices. In response to these events, several firms, including BTIG and Guggenheim, have downgraded CrowdStrike's stock from "buy" to "neutral".
Several brokerages have also revised their price targets for CrowdStrike, with Piper Sandler setting a new target at $310, down from the previous $400. RBC Capital also adjusted its target from $420 to $380, while maintaining an "outperform" rating. Despite the challenges, analysts at RBC Capital Markets and Wolfe Research maintain a positive long-term outlook for the company.
These recent developments highlight the dynamic nature of the cybersecurity sector and the potential impacts of operational disruptions on market valuation and investor sentiment. As CrowdStrike navigates these challenges, the market will closely observe the company's responses and strategies.
InvestingPro Insights
As CrowdStrike Holdings (NASDAQ:CRWD) navigates the fallout from its recent software issues, real-time data from InvestingPro offers a mixed picture of the company's financial health. With a market capitalization of approximately $65.76 billion, CrowdStrike's valuation is underpinned by robust revenue growth, with the last twelve months as of Q1 2025 showing a 34.26% increase.
Still, the company's P/E ratio stands at a lofty 490.24, reflecting a premium valuation that could be vulnerable to shifts in investor sentiment. The high Price/Book multiple of 29.27 further underscores this aspect.
Despite the recent price decline, with a 19.88% drop over the past month, InvestingPro Tips suggest that analysts predict the company will be profitable this year, and the stock has delivered a high return over the last year.
Moreover, CrowdStrike's liquid assets exceed its short-term obligations, indicating a solid liquidity position. For investors seeking further insights and analysis, there are 15 additional InvestingPro Tips available, which can be accessed with a subscription. Interested readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
As the market processes the short-term challenges faced by CrowdStrike, these metrics and insights can help investors better understand the risks and opportunities associated with the stock.
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