Veteran analyst's words on CrowdStrike turns heads

CrowdStrike (CRWD) ’s months-long stock rally since last August has come to a stop.

Despite posting solid fourth-quarter results, the cybersecurity software provider’s weaker-than-expected guidance sent shares shedding more than 6% on March 5.

For the fourth quarter, CrowdStrike reported earnings of $1.03 per share, above Wall Street’s $0.86 consensus. Revenue of $1.06 billion also topped forecasts, slightly ahead of the $1.04 billion consensus.

However, the company projected EPS for the full year 2025 between $3.33 and $3.45, well below analysts’ $4.43 consensus. Revenue guidance of $4.74 billion to $4.81 billion was roughly in line with Wall Street’s $4.78 billion estimate.

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For the current quarter, CrowdStrike expects EPS of $0.64 to $0.66, missing the $0.96 consensus.

CrowdStrike's products, such as the Falcon Platform, use AI to identify potential security risks and protect networks from threats.

The company suffered a major setback on Jul. 19, 2024, when a faulty tech update caused a massive outage that grounded flights and disrupted businesses.

The incident caused CrowdStrike’s stock to tumble nearly 30% to about $200 in days. But after that, the stock steadily recovered and hit a high of $455 on Feb. 18.

CrowdStrike is up 6.8% year-to-date.

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Wall Street veteran revisits CrowdStrike stock

Stephen Guilfoyle, Wall Street's veteran trader, said CrowdStrike's weak guidance was mainly due to a long-term tax rate adjustment.

"The adjustment took nearly a full dollar off of the firm's full-year adjusted EPS guidance. Tack that dollar back on and you have a healthy beat," Guilfoyle wrote on TheStreet Pro.

"That doesn't change the fact that the firm will be paying more tax than previously thought," he said.

Guilfoyle's career stretches back to the 1980s on the NYSE floor. His investment style is best described as hybrid, blending economic, fundamental, and technical analysis to determine which stocks are worth his hard-earned investment capital.

Guilfoyle sold some of his stakes before CrowdStrike's earnings, but he still "left enough of a chunk of CRWD" in his portfolio.

"I don't think I need to exit the stock completely. This is still a top-five holding of mine; it is probably just correctly sized now," he said.

Guilfoyle said he would probably buy those stocks back "when either the technical set-up appears to be more constructive or if the outlook for profitability were to improve."

Analysts mixed on CrowdStrike after earnings

Several analysts have also updated their thoughts on CrowdStrike stock price targets. Their views look mixed.

Bank of America reiterated its buy rating on CrowdStrike shares with a price target of $420.

The firm noted that the lower-than-consensus guidance was partially due to higher operating expenditure and accounting changes, "but the core fundamentals remain strong."

Bank of America also said CrowdStrike continues to see solid demand but warned that short-term headwinds could persist through the first half of 2025.

BMO Capital raised its price target on CrowdStrike to $405 from $380 and keeps an outperform rating, thefly.com reported.

BMO said CrowdStrike "is one of the best positioned companies in the security market," though its results for the next few quarters will continue to be impacted by last summer's outage.

"Some patience is required," the firm said.

Bernstein lowered its price target for CrowdStrike to $347 from $365 and reiterated an outperform rating. The firm said the weaker-than-estimate guidance implies further deceleration in the stock price.

Fund manager buys and sells:

Jefferies also reduced its price target for CrowdStrike to $425 from $450 and reiterated a buy rating. However, the firm still has confidence in CrowdStrike's market position.

CrowdStrike closed at $365.44 on Mar. 5. The stock is up 6.8% year-to-date.

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