Rosenblatt Securities has adjusted its outlook on CrowdStrike Holdings (NASDAQ: NASDAQ:CRWD), reducing the price target to $330 from the previous $350 while maintaining a Buy rating.
The revision comes ahead of CrowdStrike's second-quarter 2025 earnings report, scheduled for release after the market closes on August 28, 2024.
The adjustment reflects a more conservative stance following a recent IT outage at CrowdStrike. Despite initial concerns, discussions with Chief Information Security Officers (CISOs) and resellers indicate that the outage's impact was less severe than feared.
However, the analyst anticipates near-term challenges including discounting, service credits, and contract concessions, which have led to revised estimates for fiscal years 2025 and 2026.
CrowdStrike's commitment to customer support during the outage was highlighted as a key factor in maintaining customer loyalty. The firm notes that 70% of CrowdStrike's customers utilize four or more modules, indicating a lower likelihood of switching to alternative endpoint vendors. This loyalty, combined with the company's proactive customer support, is seen as a positive indicator for CrowdStrike's long-term prospects.
For the second quarter of 2025, Rosenblatt has lowered its Total Annual Recurring Revenue (ARR) estimate to $3,845 million, marking a 31% year-over-year increase, but down from the previous estimate of $212 million.
This is also below the consensus estimate of $200 million and management's guidance of 11%-13%. The analyst expects minimal impact on revenue for the quarter due to the outage occurring in the last two weeks, with unchanged projections for revenue at $955 million, operating margin at 30.5%, and pro forma earnings per share (PF EPS) at $0.97.
Looking ahead to the third quarter, the firm anticipates weaker total ARR of $4,020 million, a growth of 27.5% year-over-year, and a net new ARR (NNARR) of $175 million, a decrease of 22% year-over-year. Consequently, Rosenblatt forecasts softer revenue of $998 million, an operating margin of 22.4%, and PF EPS of $0.96 for the quarter, reflecting a more cautious outlook compared to the Street's estimates.
In other recent news, Jefferies has maintained a positive outlook, raising CrowdStrike's price target to $315, and anticipates the company's annual recurring revenue (ARR) to grow by 31%, in line with the consensus estimate.
BofA Securities, despite projecting a 50% sequential decrease in net new ARR due to a global IT outage, maintains a Buy rating and anticipates a 28% revenue growth in the second quarter.
Barclays also reaffirms its Overweight rating, adjusting its net new ARR expectations to $149 million for the second quarter of fiscal 2025, while Bernstein SocGen Group reduced its price target for CrowdStrike shares to $315, maintaining an Outperform rating.
BMO Capital Markets has also adjusted its price target from $410 to $290, citing a decrease in expected net new ARR for fiscal year 2025 by approximately $460 million, but still retains an Outperform rating.
InvestingPro Insights
As CrowdStrike Holdings (NASDAQ:CRWD) approaches its second-quarter earnings report, investors may find additional context in the company's recent performance metrics and analyst insights. According to InvestingPro data, CrowdStrike boasts a market capitalization of $66.08 billion, reflecting its substantial presence in the cybersecurity sector. Despite a high Price/Earnings (P/E) ratio of 494.98, which suggests a premium valuation, the company's revenue growth remains robust with a 34.26% increase over the last twelve months as of Q1 2023.
Two InvestingPro Tips highlight the company's financial health and future prospects: CrowdStrike holds more cash than debt, providing a level of financial stability, and net income is expected to grow this year, signaling potential for increased profitability. Investors should note that while the company trades at high valuation multiples across various metrics, its liquid assets exceed short-term obligations, and analysts predict the company will be profitable this year.
For those seeking a deeper dive into CrowdStrike's performance and forecasts, InvestingPro offers 15 additional tips that could guide investment decisions. The platform's fair value estimate of $232.6, compared to the analyst target of $325, may also serve as a point of consideration for investors evaluating the company's current share price and future potential.
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