CrowdStrike stock faces hurdles from go-to-market shifts and delayed deals

On Thursday, Rosenblatt Securities adjusted the price target for CrowdStrike Holdings (NASDAQ:), a leader in cloud-delivered endpoint protection, to $325 from the previous target of $330. Despite this change, the firm maintains a Buy rating on the stock.

The revision follows the company’s updated fiscal year 2025 (FY25) guidance, which has been impacted by various factors influencing customer retention and changes in the go-to-market strategy.

The company has introduced discounting on module additions, flexible payment terms, and extended subscription durations, which have influenced the guidance adjustments.

An IT incident that caused a delay in deal closures has shifted some business into subsequent quarters; however, most of these deals are still expected to close as they are currently in the pipeline.

CrowdStrike’s management anticipates that the current challenges will persist for a year, with a forecast for a re-acceleration in net new annual recurring revenue (NNARR) and subscription revenue in the second half of fiscal year 2026.

The revised projections have led Rosenblatt to update their outlook for CrowdStrike’s annual recurring revenue (ARR) and revenue for the third quarter of fiscal year 2024 (Q3 FY24) and the full fiscal year 2025.

The analyst from Rosenblatt stated, “Based on the revised FY25 outlook, we have lowered our Q3, FY24, and FY25 ARR/Revenue outlook. Our PT moves to $325 (from $330).” This statement reflects the firm’s response to the recent developments and their impact on the financial expectations for CrowdStrike. The new price target represents Rosenblatt’s current valuation of the company’s stock based on the updated forecasts.

In other recent news, CrowdStrike Holdings has seen several adjustments in analyst price targets following its recent quarterly earnings report. Notably, Needham maintained a positive outlook while lowering its target to $350 from $375, and RBC Capital Markets revised its target to $335 from $345.

Cantor Fitzgerald adjusted its target from $400 to $350, and Oppenheimer reduced its target to $365 from $450. Despite these changes, Goldman Sachs maintained its Buy rating and a steady price target of $295.

These adjustments come as CrowdStrike reported an annual recurring revenue (ARR) of $3.865 billion, a 31.9% year-over-year increase, and a record non-GAAP operating income of $227 million, a 46% growth from the previous year.

However, the company adjusted its full-year revenue forecast downwards by approximately $100 million, which includes a deferral of approximately $60 million in revenue from the second quarter as part of CrowdStrike’s customer commitment package.

These recent developments follow an IT outage that is expected to impact CrowdStrike’s financials into the first half of fiscal year 2026. In response to the outage, the company introduced new customer commitment packages to mitigate the impact. Despite the challenges, CrowdStrike continues to receive positive feedback for its Falcon platform and shows potential for future growth.

InvestingPro Insights

As CrowdStrike Holdings (NASDAQ:CRWD) navigates through its updated fiscal strategies and market challenges, it’s worth noting the company’s financial health and growth prospects. According to InvestingPro data, CrowdStrike boasts a significant market capitalization of $65.67 billion USD, indicative of its substantial presence in the cybersecurity sector. The company’s revenue growth remains robust, with an impressive 34.26% increase over the last twelve months as of Q1 2023, underscoring its ability to expand despite market headwinds.

From an investment standpoint, CrowdStrike’s high P/E ratio of 483.56 suggests that investors are willing to pay a premium for its earnings, reflecting optimism about future growth. This is further supported by an InvestingPro Tip highlighting that net income is expected to grow this year. Additionally, CrowdStrike’s strategic financial management is evident, as another InvestingPro Tip points out that the company holds more cash than debt, providing flexibility and security in its operations.

For a deeper analysis, including 13 additional InvestingPro Tips that could influence investment decisions, interested readers can explore CrowdStrike’s profile on InvestingPro. Such insights could provide valuable context to the company’s future profitability and stock performance, as predicted by analysts.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.