Wall Street is reacting to CrowdStrike’s (NASDAQ: CRWD) full-quarter earnings report after the cybersecurity giant experienced a major global IT outage in July.
Although the outage had raised concerns about the company’s client retention abilities, CrowdStrike reported a solid Q3, beating analysts’ estimates in key areas.
Revenue came in at $1.01 billion, surpassing estimates of $982.8 million, marking a 29% year-over-year increase. Subscription revenue hit $962.7 million, exceeding expectations of $933.6 million, up 31% YoY. However, professional services revenue reached $47.4 million, missing the forecast of $48.9 million.
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Additionally, Annual Recurring Revenue (ARR) was reported at $4.02 billion, beating Wall Street estimates of $4.01 billion and reflecting a 27% year-over-year growth.
For the last quarter of 2024, CrowdStrike is projecting revenue between $1.029 billion and $1.035 billion, slightly below analysts’ expectations of $1.03 billion. The company also forecasts adjusted earnings per share (EPS) in the $0.84 to $0.86 range, just under the consensus estimate of $0.86.
To this end, the Q4 outlook has caused investors to turn cautious, with CRWD’s share price showing weakness in the short term. As of press time, the stock was valued at $344, down over 5%. Despite the July challenges, CrowdStrike’s stock has recovered, rallying almost 40% year-to-date.
Now, following the earnings report and the Q4 forecast, several Wall Street analysts have issued a mixed outlook for CRWD stock.
Initially, as reported by Finbold, some analysts adjusted their outlook on CRWD following the outage. However, they maintained that the company still has strong technology offerings and is aggressively targeting new markets.
CRWD bullish outlook
With a ‘Buy’ rating and a price target of $420, Needham highlighted that CrowdStrike exceeded all guided metrics in Q3. The analysts noted that the company’s strategy to expand its Falcon Platform and increase module adoption is on track, hence the bullish outlook.
Citi also issued a similar rating and set a price target of $400. The banking giant noted that despite the impact of the July outage, which caused sales cycle delays, CrowdStrike posted impressive revenues and healthy operating leverage.
Baird set a target of $390 with an ‘Outperform’ rating and emphasized Falcon Flex as a key driver of platform consolidation and larger deal sizes. The firm expects continued ARR acceleration in the second half of FY26, supported by strong gross and net retention.
Oppenheimer also issued another bullish outlook, with an Outperform rating and a price target of $410. The analysts pointed to strong module adoption and extended contract durations, and they stated that CrowdStrike is poised for a solid recovery.
CRWD bearish outlook
Leading the bearish call is Scotiabank, offering a ‘Sector Perform’ rating and a price target of $300. The experts pointed to a sharp decline in new ARR and deep FCF margin contraction, indicating challenges ahead.
BTIG also cautioned with a ‘Neutral’ rating, noting that although the quarter exceeded expectations, management’s cautious guidance for Q4 suggested potential volatility in ARR growth. Concerns about seasonality and long sales cycles could weigh on future performance.
HSBC offered a ‘Hold’ rating and a price target of $347, downgrading CrowdStrike from ‘Buy’ to ‘Hold’. It cited concerns over the company’s near-term outlook, including declining ARR and margin contraction.
In summary, while analysts are generally positive about CrowdStrike’s long-term growth prospects, the company’s short-term challenges, such as the post-outage impact and slower-than-expected ARR growth, create some caution in the market.
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