On Friday, Stifel reaffirmed its Buy rating and $400.00 price target for CrowdStrike Holdings (NASDAQ:CRWD) stock, in light of a significant global cybersecurity event.
The incident involved a defective update from CrowdStrike that led to Microsoft (NASDAQ:MSFT) Windows systems crashing worldwide, disrupting operations across various businesses. Notable entities affected included several banks, the London Stock Exchange, and airlines such as Delta and United, which faced ground-stop orders.
The faulty update prompted a sharp decline in CrowdStrike's stock value, with a 30% drop in pre-market trading, which later adjusted to a 15% decrease. Concurrently, Microsoft's shares fell by 2%. Stifel's assessment pointed out that while the incident is damaging to CrowdStrike's reputation, it is considered less severe than a security breach or cyberattack.
The firm emphasized that such update issues are not uncommon in the tech industry, as many companies, including Microsoft, have previously distributed problematic updates.
Stifel also speculated on the potential for competitors, notably SentinelOne (NYSE:S), to leverage the situation to their advantage in the short term. The timing of the event raises questions about its possible effects on CrowdStrike's sales performance in the closing weeks of the quarter.
Stifel's valuation of CrowdStrike at a 12-month target price of $400 is based on an 18.5x CY25E EV/ARR multiple, in comparison to a 10x multiple for similar high-growth peers in the sector.
In other recent news, cybersecurity firm CrowdStrike experienced a series of significant developments. The company's shares were subjected to varying ratings by different analyst firms.
Oppenheimer raised the price target for CrowdStrike to $450, maintaining an Outperform rating based on the expectation of surpassing its second-quarter fiscal year 2025 revenue guidance.
However, Redburn-Atlantic downgraded the stock from Buy to Sell due to concerns about future revenue growth and potential market pressures, adjusting the price target to $275. Similarly, Piper Sandler shifted its rating from Overweight to Neutral as CrowdStrike's shares reached significant growth.
In addition to these analyst evaluations, CrowdStrike was implicated in a widespread tech outage that disrupted operations across various sectors globally, including aviation, finance, media, and emergency services.
The outage was linked to system issues at CrowdStrike, affecting major U.S. airlines, causing ground stops and disruptions for carriers, media companies, banks, and telecoms firms worldwide.
These recent developments highlight the dynamic nature of the cybersecurity sector and the challenges and opportunities that companies like CrowdStrike face. Investors are advised to keep a close eye on the unfolding situation and the potential impacts on the company's performance.
InvestingPro Insights
In light of recent events surrounding CrowdStrike Holdings (NASDAQ:CRWD), investors are keenly observing the company's financial metrics and future outlook. According to InvestingPro data, CrowdStrike boasts a robust market capitalization of $83.48 billion, reflecting its significant presence in the cybersecurity industry. Despite the recent mishap, analysts anticipate net income growth for CRWD this year, signaling confidence in the company's ability to recover and expand its profitability.
While the stock has faced a notable setback over the last week, with a 7.61% price total return decrease, it has shown resilience with an impressive 117.66% one-year price total return as of the last data point. This suggests that the company has a strong foundation, with a history of overcoming challenges. Additionally, CrowdStrike's liquid assets exceed its short-term obligations, providing financial stability and flexibility. With a high revenue growth rate of 34.26% over the last twelve months as of Q1 2025, the company demonstrates its ability to increase its earnings effectively.
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