Is It Time to Bet on a Comeback for CrowdStrike Stock?

Barchart · 10/17 13:04

In July, the cybersecurity world faced a seismic shock when CrowdStrike Holdings, Inc. (CRWD) was thrust into the spotlight for all the wrong reasons. A glitchy software update triggered what has been dubbed the largest IT outage in history, hitting enterprise-level Microsoft (MSFT) clients and causing chaos for Fortune 500 companies like Delta Air Lines (DAL). The fallout was swift and brutal, with CRWD taking a 32% nosedive that month.

But impressively, CrowdStrike seems to have already clawed its way back to solid ground. Buoyed by impressive quarterly earnings and exciting enhancements to its artificial intelligence (AI)-powered Falcon platform, customer enthusiasm is back on the upswing. Plus, despite the July debacle, CrowdStrike has managed to retain most of its pre-incident contracts, while locking in major new partnerships with players like Nvidia (NVDA) and other strategic players in threat detection.

With analysts still upbeat about the cybersecurity stock, is it the right time to jump on CRWD’s comeback? Let’s dive deeper.

About CrowdStrike Stock

Based in Austin, CrowdStrike Holdings, Inc. (CRWD) is a leading global cybersecurity firm armed with its cutting-edge Falcon platform. Merging AI with the CrowdStrike Security Cloud, it excels in real-time attack detection and automated protection, delivering seamless solutions.

As data breaches rise, the demand for cybersecurity is surging, and CrowdStrike is right in the mix, innovating with new products and strategic partnerships. With six consecutive profitable quarters and boasting a market cap of $74.5 billion, this cybersecurity trailblazer is redefining standards and protecting organizations against ever-evolving cyber threats.

Shares of CrowdStrike have been on a quiet yet impressive climb despite July’s global snafu, rallying 66.9% over the past 52 weeks and posting a solid 16.2% gain just this past month - outpacing the broader S&P 500 Index’s ($SPX) performance over both time frames.

Although CRWD is still down about 23% from its July peaks, the pullback might offer a buy-the-dip opportunity. In fact, CRWD has already bounced over 54% since hitting its YTD low on Aug. 5.

That said, CrowdStrike still carries a hefty price tag. The stock is currently trading at a forward price/earnings ratio of 84.15, on an adjusted basis. That’s a significant premium to most of its closest peers, with the exception of Cloudflare (NET) - which means investors are paying up for CRWD’s future earnings growth, even after the pullback.

CrowdStrike Beats Q2 Earnings Estimates

CrowdStrike delivered impressive fiscal Q2 earnings results after the close on Aug. 28. Revenue exceeded Wall Street’s projections by a narrow margin, soaring 32% year over year to $963.9 million, fueled by strong subscription revenue growth of 33%.

On an adjusted basis, net income improved 44.9% to $260.8 million, while EPS rose 40.5% to $1.04, beating estimates. Annual Recurring Revenue (ARR) also showed strong momentum, up 32% from the previous year to $3.86 billion, bolstered by $217.6 million in net new ARR added in Q2.

CrowdStrike reported record free cash flow of $272 million in Q2, up 44.3% annually, with FCF margin rising to 28%, and operating cash flow hitting an impressive $327 million.

Plus, after ending the quarter with over $4 billion in cash, the company now has significant resources for reducing its $743 million long-term debt and making strategic investments, underscoring its resilience amid economic uncertainties and its commitment to future growth.

For fiscal 2025, CrowdStrike revised its revenue outlook slightly downward to $3.9 billion at the midpoint, with adjusted EPS now forecasted at $3.63. This cut factors in a $60 million hit from customer commitment packages, which CFO Burt Podbere noted in the Q2 earnings call is a strategic move, expecting it to drive higher platform adoption and stronger customer partnerships over time, reinforcing CrowdStrike's long-term growth ambitions.

Analysts tracking CrowdStrike expect GAAP EPS to grow 6% in fiscal 2025 to $0.53, followed by a 54.7% leap to $0.82 in fiscal 2026.

What Do Analysts Expect for CrowdStrike Stock?

RBC Capital analysts are upbeat about CrowdStrike, describing it as a frontrunner in the cybersecurity niche with promising growth ahead. In a recent report, they named CrowdStrike among their top software picks for North America in 2025, recognizing it as one of 11 standout companies to watch.

Analyst Matthew Hedberg pointed out that despite the midsummer hiccup, CrowdStrike is positioned to bounce back stronger, turning “short-term noise” into long-term opportunity. He believes the company’s fiscal 2025 and 2026 estimates are now more secure, paving the way for the ambitious goal of reaching $10 billion in ARR.

Additionally, on Sept. 23, investment firm Needham threw its weight behind CrowdStrike, issuing a “Buy” rating and setting a price target of $360. The firm is encouraged by CRWD’s strong execution following the recent Fal.Con conference.

CRWD has a consensus “Strong Buy” rating overall. Of the 43 analysts in coverage, 34 recommend a “Strong Buy,” three suggest a “Moderate Buy,” and the remaining six maintain a “Hold” rating.

The average analyst price target of $325.17 indicates a potential upside of 3.7%. The Street-high price target of $424 suggests that CRWD stock could rally as much as 35.2% from current prices.

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On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.