On Thursday, Jefferies maintained a positive outlook on CrowdStrike Holdings (NASDAQ:CRWD), increasing the cybersecurity firm's price target from $300.00 to $315.00 while keeping a Buy rating on the stock.
The firm's analysis suggests that CrowdStrike's annual recurring revenue (ARR) from new business may see a year-over-year decline of 2%, considering churn, compared to a 23% year-over-year increase in the first quarter. This projection leads to an ARR of $3.84 billion, marking a 31% growth year-over-year, which is in line with the consensus estimate of $3.85 billion or 31% growth.
The recent IT outages worldwide, attributed to a CrowdStrike update for Windows, have been factored into the revised estimates. Although the incident impacted only two weeks of the second fiscal quarter, it is anticipated that investors will focus more on the updated guidance for fiscal year 2025.
Jefferies believes that the consensus ARR growth estimate of 31% remains achievable. The firm's prior lowered estimates are seen as a more accurate reflection of the potential implications for new business due to the IT outages.
CrowdStrike's forthcoming financial guidance will be closely monitored by investors, especially in the context of the recent service disruptions. The company's ability to meet its long-term targets despite short-term setbacks appears to remain a key point of interest in the investment community.
In other recent news, CrowdStrike Holdings is set to release its second-quarter earnings, with BofA Securities projecting a revenue growth of 28%. This comes after a global IT outage which is expected to have caused a delay in sales cycles and possibly led to customer discounts. In response, BofA Securities predicts a 50% sequential decrease in net new Annual Recurring Revenue (ARR) and anticipates a downward revision of the full-year guidance from CrowdStrike's management.
Despite the recent challenges, Barclays (LON:BARC) maintains an Overweight rating on CrowdStrike stock, adjusting its net new ARR expectations to $149 million for the second quarter of fiscal 2025. Bernstein SocGen Group and BMO Capital Markets have also adjusted their price targets for CrowdStrike shares, maintaining an Outperform rating despite the reductions.
Various analyst firms, including Citi, DA Davidson, and Piper Sandler, have revised their outlooks, with price target reductions and rating upgrades. Amid these developments, Alphabet (NASDAQ:GOOGL) Inc. has significantly reduced its stake in CrowdStrike.
These adjustments and the upcoming earnings report underscore recent developments in CrowdStrike's financial landscape. The report will provide further insight into the financial repercussions of the July incident and the company's outlook for the remainder of the fiscal year.
InvestingPro Insights
The latest analysis from Jefferies on CrowdStrike Holdings (NASDAQ:CRWD) underscores the resilience of the cybersecurity firm's growth trajectory, despite recent headwinds. Supporting this sentiment, InvestingPro data reveals a robust financial posture for CrowdStrike, with a market capitalization of approximately $66.49 billion, highlighting the scale at which the company operates in the cybersecurity industry.
InvestingPro Tips for CrowdStrike indicate that the company holds more cash than debt on its balance sheet, which could provide financial flexibility and stability in navigating through the challenges it has recently faced. Additionally, analysts predict that CrowdStrike will be profitable this year, which may reassure investors about the company's ability to maintain profitability amidst dynamic market conditions.
Furthermore, CrowdStrike's revenue has seen a significant increase, with a growth rate of 34.26% over the last twelve months as of Q1 2023. This aligns with Jefferies' projection of a 31% year-over-year growth in annual recurring revenue. While the company trades at high valuation multiples, with a Price/Book ratio of 26.22 and a P/E ratio of 496.84, its strong revenue growth and expected profitability may justify these premium valuations to some investors.
For readers interested in a deeper dive into CrowdStrike's financials and future performance estimates, there are over 10 additional InvestingPro Tips available, which provide further insights into the company's financial health and market position. These can be accessed through the InvestingPro platform at https://www.investing.com/pro/CRWD.
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