In July 2024, a glitchy software update from cybersecurity juggernaut CrowdStrike (CRWD) triggered a global outage for many enterprise-level Microsoft (MSFT) clients that temporarily disrupted operations for numerous Fortune 500 companies - including, most notoriously, Delta Air Lines (DAL). At that time, CRWD stock plunged about 36% in just two weeks following the incident.
However, the stock has rebounded considerably from its Aug. 5 year-to-date lows, up more than 41% since then. CRWD's comeback has been driven by solid quarterly earnings results and ne enhancements to its artificial intelligence (AI)-powered Falcon platform, which have been well-received by customers. This platform has seen increasing adoption by customers of all sizes, helping to drive CrowdStrike's revenue growth and expand its market share in the cybersecurity space.
CrowdStrike has managed to keep most of its pre-incident deals in the pipeline, despite the challenges following the July outage. Additionally, the company has secured significant new contracts post-incident, including a major deal with an enterprise software company worth 8 figures. This indicates that CrowdStrike's customers continue to trust and rely on its services, showing confidence in the company's ability to manage and rectify critical issues. This resilience in maintaining and expanding its customer base after the outage highlights CrowdStrike's strong market position and brand reputation.
Moreover, several analysts have raised their forecasts and price targets for CrowdStrike, signaling confidence in the company's future performance and its ability to sustain growth amidst competitive pressures. So, is the stock a good buy right now? Here's a closer look.
About CrowdStrike Stock
Founded in 2011, CrowdStrike (CRWD) is a leader in the cybersecurity space, known for its pioneering cloud-native endpoint protection platform. Its flagship product, Falcon, uses advanced AI algorithms to provide real-time threat detection and incident response capabilities. Falcon's ability to process over 1 trillion security events daily from millions of sensors worldwide enables it to offer unprecedented protection against modern cyber threats. The company commands a market cap of $68.19 billion.
Shares of the cybersecurity firm have rallied over 75% in the past 52 weeks, but have underperformed the broader S&P 500 Index ($SPX) on a year-to-date basis, with only an 11% gain. CRWD is still down about 30% from its July highs, presenting a potential dip-buying opportunity.
Over the longer term, the growth stock remains a standout performer, having surged 365% over the past five years.
Despite the recent pullback, CrowdStrike stock commands a premium valuation, trading at 77 times forward earnings and 17.62x forward sales. Among other major cybersecurity stocks, only Cloudflare (NET) is priced at a similar premium; however, CRWD has grown revenues at a faster pace than NET over the past five years, and is projected to continue growing at a more rapid clip.
CrowdStrike Beats Estimates on Q2 Earnings
CrowdStrike reported stronger-than-forecast second-quarter earnings results after the close on Aug. 28. The company exceeded analysts' expectations by narrow margins, with total revenue surging 32% year-over-year to $963.9 million, fueled by robust subscription revenue growth. Profitability also improved, with net income reaching $47.0 million, compared to $8.5 million in the same period last year. Annual Recurring Revenue (ARR) continued its upward trajectory, increasing 32% from the year-ago quarter to $3.86 billion, with $217.6 million added in net new ARR during the quarter.
On an adjusted basis, CrowdStrike sailed past estimates, reporting a profit of $1.04 per share, with non-GAAP subscription margin improving to 81%.
Turning to the balance sheet, CrowdStrike achieved a record free cash flow of $272 million in Q2, and record operating cash flow of $327 million. CRWD ended the quarter with cash and equivalents just north of $4 billion. This provides ample resources for debt reduction, investments, and potential shareholder returns, highlighting the company's resilience in navigating economic uncertainties.
For fiscal year 2025, management slightly lowered its revenue outlook to $3.9 billion at the midpoint, with EPS expected at $3.63. The guidance cut includes an estimated $60 million impact from CrowdStrike's customer commitment packages, which it expects "will ultimately lead to higher platform and module adoption and deeper partnerships with customers" over the long term, said CFO Burt Podbere.
Over the long term, CrowdStrike aims to generate annual recurring revenue of $10 billion by 2030.
What Do Analysts Think About CrowdStrike Stock?
Analysts are generally bullish on CrowdStrike, with many viewing the company as a leader in the cybersecurity market with strong growth potential.
After earnings, Oppenheimer analyst Ittai Kidron backed a “Buy” rating, but cut CRWD's price target to $365 from $450. "Looking ahead, while we expect the stock to remain range-bound until investors gain greater clarity around fiscal 2026 growth trends and the timing of new ARR re-acceleration, we believe CrowdStrike's long-term growth opportunity remains intact," wrote the analyst.
More recently, Jefferies and KeyBanc separately raised their respective price targets on CRWD to $345. Both firms have a “Buy” rating on the stock.
Of the 42 analysts covering the stock, the consensus is a "Strong Buy" rating for the leading cybersecurity company, with 34 firms giving CRWD their highest rating.
The average 12-month price target among analysts is $326.18, indicating an expected 15% upside potential. The Street-high price target for CRWD is $424, a premium of more than 49% to Thursday's close.
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