Stock of the week – CrowdStrike

The company’s annual recurring revenue (ARR) increased by 33% year-over-year to $3.65 billion, and it delivered record operating cash flow of $383 million and free cash flow of $322 million. These figures underline CrowdStrike’s robust financial health and its ability to scale profitably. The Falcon platform’s innovative architecture continues to attract a diverse customer base, enabling the company to solve critical cybersecurity, IT, and data problems effectively.

Despite a recent software update glitch that caused a significant outage, affecting millions of Microsoft Windows devices globally, analysts remain optimistic about CrowdStrike’s long-term prospects. The outage, while damaging in the short term, is seen as a minor setback in the broader context of CrowdStrike’s market position. The company quickly provided solutions to affected customers, and while there might be some short-term reputational damage, the consensus is that CrowdStrike’s reputation as a leader in endpoint security remains largely intact.

Valuation concerns persist, with CrowdStrike’s stock trading at a premium compared to its peers. Some analysts, like those at Wedbush and Truist Securities, suggest that the outage might lead to temporary pricing concessions, potentially affecting short-term financial performance. However, the overall belief is that CrowdStrike will continue to attract customers seeking comprehensive and integrated cybersecurity solutions.

Despite the temporary setback from the outage, CrowdStrike is expected to maintain its leadership position in the cybersecurity industry. The company’s strategic partnerships and continuous innovation, such as the recent introduction of Falcon Next-Gen SIEM and expanded cloud security capabilities, position it well for future growth. Investors might consider waiting for a more attractive entry point, but the fundamental strengths of CrowdStrike make it a compelling buy for long-term growth.

Here is how the bank analysts view the company currently:

The consensus of the bank analysts is “Buy”. Out of the 49 analysts covering the share, 39 rate the stock with “Buy,” 8 with “Hold,” and 2 analysts recommend selling the stock. The average expected upside of the stock price for the next six to twelve months is currently ca 48% (closing price on 22/07/2024).

Sources:

•  CrowdStrike UMushroom.com

•  CrowdStrike Reports First Quarter Fiscal Year 2025 Financial Results

•  CrowdStrike Shares Plunge on a Major Outage. Is This a Golden Opportunity to Buy the Stock?

•  CrowdStrike’s stock stems its bleeding, but even the bulls see some risk

•  CrowdStrike Stock Rises. Has It Turned a Corner?