Piper Sandler Downgrades CrowdStrike on Valuation Concerns

• Morgan Stanley reaffirms its "Overweight" rating on NASDAQ:CRWD, raising the price target from $355 to $390.
• CrowdStrike's stock price reflects a 1.75% increase, trading at $352.03, with a year-high of $398.33 and a low of $200.81.
• The company's market capitalization stands at approximately $82.32 billion, showcasing its significant presence in the cybersecurity industry.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, providing cloud-delivered protection across endpoints, cloud workloads, identity, and data. The company is known for its Falcon platform, which offers advanced threat intelligence and cyberattack prevention. CrowdStrike competes with other cybersecurity firms like Palo Alto Networks and Fortinet.

On December 2, 2024, Morgan Stanley maintained its "Overweight" rating for CrowdStrike, indicating a positive outlook on the stock. At the time, the stock was priced at $342.07. Morgan Stanley also raised its price target from $355 to $390, suggesting confidence in the company's future performance and potential for growth.

The Investment Committee has identified CrowdStrike as a top stock to watch for the second half of the year. This attention from investors and analysts suggests potential developments in the stock's performance. Currently, CRWD is trading at $352.03, reflecting a 1.75% increase or $6.06 from the previous price.

Today, CrowdStrike's stock has fluctuated between $336.56 and $354.34. Over the past year, it has seen a high of $398.33 and a low of $200.81. This volatility indicates the dynamic nature of the stock, which is common in the tech sector. The company's market capitalization is approximately $82.32 billion, with a trading volume of 3,280,442 shares on the NASDAQ exchange.

• CrowdStrike Holdings, Inc. (NASDAQ:CRWD) receives a price target of $395 from KeyBanc, indicating a potential upside.
• The company surpasses its $4 billion annual recurring revenue milestone, showcasing strong financial performance.
• CrowdStrike boasts high retention rates, with a gross retention rate (GRR) of 97% and a net retention rate of 115%, reflecting strong customer loyalty.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, known for its cloud-delivered endpoint protection platform. The company competes with other cybersecurity firms like Palo Alto Networks and Fortinet. On November 27, 2024, Eric Heath from KeyBanc set a price target of $395 for CRWD, suggesting a potential upside of 15.47% from its trading price of $342.07.

Despite a recent decline in share price due to an unexpected third-quarter loss, CrowdStrike's financial performance remains strong. The downturn followed a significant outage in July, yet analysts continue to hold a positive outlook on the stock. As highlighted by Nicole Petallides, the analyst community, including Wedbush's Dan Ives, remains optimistic, with Ives setting a bullish price target of $390.

CrowdStrike's resilience is evident in its recent financial achievements. In the third quarter of fiscal year 2025, the company surpassed its $4 billion annual recurring revenue (ARR) milestone, reporting an ARR of $4.02 billion, slightly above the estimated $4.01 billion. This achievement underscores the company's robust market position and customer loyalty.

The company's retention rates further highlight its strong customer base. With a gross retention rate (GRR) of 97% and a net retention rate of 115%, CrowdStrike not only retains its customers but also sees them expanding their product portfolios. This stickiness is a testament to the value customers find in CrowdStrike's offerings.

Currently, CRWD's stock is priced at $341.78, reflecting a decrease of 6.18% or $22.53. The stock has fluctuated between $340.52 and $359.22 during the trading day. Over the past year, it has seen a high of $398.33 and a low of $200.81, with a market capitalization of approximately $83.77 billion. The trading volume for the day is 7,590,794 shares.

CrowdStrike Holdings (NASDAQ:CRWD) reported strong third-quarter results and raised its annual forecast, driven by increased demand for its cybersecurity solutions amid the rise of AI-fueled online threats. Despite the positive performance, the company’s shares dropped over 3% in pre-market today due to underwhelming fourth-quarter revenue guidance.

In the third quarter, CrowdStrike achieved revenue growth of 29%, reaching $1.01 billion and surpassing analyst expectations of $982 million. Adjusted profit per share came in at $0.93, well above the forecasted $0.81. The company also crossed $4 billion in annual recurring revenue (ARR), a milestone that reinforced its leadership in the cybersecurity sector.

For the fourth quarter, CrowdStrike projected revenue between $1.03 billion and $1.04 billion, aligning closely with the consensus estimate of $1.03 billion but failing to excite investors. However, the company raised its annual adjusted earnings outlook, now expecting profit per share in the range of $3.74 to $3.76, up from the prior guidance of $3.61 to $3.65.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, specializing in cloud-based security solutions. The company provides services to protect against cyber threats, which are increasingly prevalent in today's digital landscape. Competitors in this space include companies like Palo Alto Networks and Fortinet. CrowdStrike's recent financial performance highlights its strong market position and operational efficiency.

On November 26, 2024, CrowdStrike reported earnings per share (EPS) of $0.93, surpassing the estimated $0.81. This represents a 14.81% earnings surprise, as highlighted by Zacks. The company also reported revenue of approximately $1.01 billion, exceeding the estimated $982.8 million. This revenue figure marks a significant increase from the $786 million reported in the same quarter last year, reflecting robust growth.

Despite the strong third-quarter performance, CrowdStrike's shares fell by about 2% in extended trading. This decline was due to the company's fourth-quarter revenue forecast, which did not meet investor expectations. CFO Burt Podbere noted the company's success with customer commitment packages, which have strengthened client relationships despite challenges from a previous incident on July 19th.

CrowdStrike's financial metrics reveal a high valuation, with a price-to-earnings (P/E) ratio of approximately 701.57. This indicates that investors are willing to pay a premium for the company's earnings. The price-to-sales ratio stands at about 23.88, and the enterprise value to sales ratio is 22.95, reflecting the company's overall valuation in relation to its revenue.

The company's debt-to-equity ratio is 0.26, suggesting a relatively low level of debt compared to equity. Additionally, the current ratio is 1.86, indicating that CrowdStrike has a strong ability to cover its short-term liabilities with its short-term assets. Despite the modest earnings yield of 0.14%, the company's financial health remains robust, supported by its operational efficiency and market demand for cybersecurity services.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leading figure in the cybersecurity sector, known for its cloud-based endpoint protection solutions through the Falcon platform. The company competes with giants like Palo Alto Networks and Fortinet, aiming to stay ahead in the fast-paced cybersecurity market.

On November 26, 2024, CRWD is poised to announce its quarterly earnings, with Wall Street analysts forecasting an earnings per share (EPS) of $0.81. This represents a minor decrease of 1.2% compared to the previous year. However, the company's revenue is expected to hit around $983 million, a significant increase of 25% from the year before, underscoring CrowdStrike's expanding market reach and customer base.

The forthcoming week holds importance for investors, especially with markets closing on Thursday for Thanksgiving. CrowdStrike stands out among the stocks to monitor, alongside notable firms like Best Buy, Zoom, and Macy's. The release of October inflation figures and earnings reports from various retailers will likely impact market trends. Investors are set to closely observe these developments to assess the broader economic environment and consumer behavior.

CrowdStrike's financial indicators show a high valuation, with a price-to-earnings (P/E) ratio of approximately 533.88. This suggests that investors are ready to pay a premium for the company's earnings, signaling strong growth expectations. The price-to-sales ratio is around 25.95, indicating that investors are valuing the company's sales per share at nearly 26 times. These metrics underscore the market's optimism regarding CrowdStrike's future performance.

Despite its lofty valuation, CrowdStrike exhibits a relatively low debt-to-equity ratio of 0.27, reflecting a prudent use of debt. The current ratio of about 1.90 indicates the company's solid capability to meet its short-term obligations with its short-term assets, an essential aspect of maintaining growth and managing market volatilities effectively.

CrowdStrike Holdings (NASDAQ:CRWD) delivered stronger-than-expected second-quarter results, driving its stock up 8% intra-day today.

The cybersecurity company reported earnings per share of $1.04, surpassing Street expectations of $0.97. Revenue for the quarter came in at $963.9 million, exceeding the consensus forecast of $958.32 million and reflecting a 32% year-over-year increase.

CrowdStrike's Annual Recurring Revenue (ARR) also saw a 32% year-over-year growth, reaching $3.86 billion, with $217.6 million in net new ARR added during the quarter. Subscription revenue, which makes up the majority of the company's earnings, increased by 33% year-over-year to $918.3 million.

Despite the strong quarterly results, CrowdStrike's full-year guidance fell short of analyst expectations. The company projects 2025 adjusted EPS between $3.61 and $3.65, below the Street of $3.88, and revenue between $3.89 billion and $3.9 billion, missing the $3.95 billion analyst estimate.

Scotiabank analysts reduced their price target for CrowdStrike Holdings (NASDAQ:CRWD) to $265 from $300 while maintaining a Sector Perform rating on the stock. The adjustment follows extensive fieldwork, including discussions with four large CrowdStrike customers, three seasoned lawyers, and a cybersecurity insurance expert, to assess the implications of the recent CrowdStrike/Windows global outage.

The findings suggest that most customers with minimal or moderate impact are unlikely to seek concessions from CrowdStrike, while those facing serious financial impacts may turn to cybersecurity insurance and negotiate directly with CrowdStrike for service credits or additional offerings. Legal action appears to be a last resort. Given these insights, the analysts see increased risk to CrowdStrike's ARR estimates for 2025-26, but less concern about legal costs affecting FCF targets for the same period. Despite acknowledging CrowdStrike as one of the leading software companies, the analysts expect the shares to face challenges in 2024, thus maintaining the Sector Perform rating.