On Tuesday, FBN Securities adjusted its outlook on CrowdStrike Holdings (NASDAQ:CRWD), reducing the price target to $370 from the previous $400. Despite this change, the firm maintained its Outperform rating on the cybersecurity company's shares.
The revision follows CrowdStrike's second fiscal quarter results, which surpassed expectations in annual recurring revenue (ARR), revenue, and non-GAAP (NG) earnings per share (EPS), but provided guidance for the third fiscal quarter and fiscal year 2025 that fell short of consensus estimates.
CrowdStrike reported a 32% year-over-year increase in ARR for the second fiscal quarter, slightly outperforming consensus by 0.4%. Additionally, the growth in net new ARR was 11% year-over-year, exceeding the 4% year-over-year consensus.
The company's NG EPS reached $1.04, six cents above consensus, supported by an NG operating margin of 23.5%, which grew by 2.3 percentage points year-over-year and was 1.8 percentage points higher than consensus.
The downgrade in the price target is attributed to a software update issue that occurred on July 19, which has impacted the company's near-term growth trajectory. Before this event, CrowdStrike was on track to deliver net new ARR growth well above the actual 11% year-over-year increase reported for the second fiscal quarter.
Looking ahead, FBN Securities forecasts a slowdown in revenue growth to 21% year-over-year in the first half of fiscal year 2026, followed by an expected acceleration to 23% year-over-year growth in the second half of the same fiscal year. The firm has updated its model to reflect these projections and the impact of the July software update issue on CrowdStrike's performance.
In other recent news, CrowdStrike Holdings has seen a series of adjustments from various analyst firms following their recent financial results and revised future guidance. Deutsche Bank (ETR:DBKGn) raised its price target for CrowdStrike to $285, while maintaining a Hold rating.
This was due to the company's Q2 FY25 results, which led to revised revenue forecasts for FY25 and FY26, and adjustments to Free Cash Flow (FCF) projections.
Argus, on the other hand, reduced its price target to $325, maintaining a Buy rating, citing a software update disruption as a factor. TD Cowen also lowered CrowdStrike's price target to $380 due to a downward revision in the fiscal year 2025 guidance. Despite this, the firm maintained a Buy rating on the stock, asserting confidence in CrowdStrike's long-term prospects.
BMO Capital Markets increased its price target for CrowdStrike to $315, maintaining an Outperform rating. The firm believes that the impact of a recent service outage is less than initially anticipated. Canaccord Genuity, while praising the company's post-incident improvements, lowered its price target to $330 but kept a Buy rating.
InvestingPro Insights
In light of FBN Securities' updated outlook on CrowdStrike Holdings (NASDAQ:CRWD), recent data from InvestingPro provides additional context for investors considering the company's financial health and market performance. According to InvestingPro, CrowdStrike boasts a substantial market capitalization of $65.34 billion and has been trading at a high earnings multiple, with a P/E ratio of 379.08. This valuation reflects the company's strong growth prospects, underscored by a 33.07% year-over-year revenue growth as of the last twelve months leading up to Q2 2023.
InvestingPro Tips highlight that CrowdStrike holds more cash than debt on its balance sheet, offering the company financial flexibility. Moreover, analysts expect net income to grow this year, which is a positive sign for potential investors. For those interested in exploring further, there are 36 additional InvestingPro Tips available, providing deeper insights into CrowdStrike's financial and market performance. Notably, the company's liquid assets exceed its short-term obligations, indicating good liquidity and short-term financial stability.
These metrics and insights can be particularly valuable when considering the downgrade in the price target by FBN Securities and the near-term growth concerns. Investors can access more detailed analysis and tips on CrowdStrike by visiting the InvestingPro platform.
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