Given the global IT outage caused by a faulty software update by CrowdStrike in July, analysts are surprisingly upbeat on the cybersecurity stock.
One analyst says CrowdStrike may have more trouble making sales than previously, but still sees room for the stock to rise 17%.
D.A. Davidson analyst Rudy Kessinger says the potential rewards of owning CrowdStrike stock now outweigh the risks. “[CrowdStrike] will quickly regain their footing & and momentum given their still strong reputation & best-of-breed cybersecurity platform,” Kessinger wrote in a note reiterating a Buy rating on Tuesday evening.
Out of 51 analysts covering the stock, 40 rate it Buy or Overweight, according to FactSet. Only three rate CrowdStrike at Sell or Underweight.
Kessinger said that while the company will take a financial hit in the near to medium term, he believes the pullback in shares following the outage, a slide of about 35%, more than reflects the potential damage. He lowered his target for the stock price from $380 to $290, but that still implies a gain of 17% from the stock’s closing price on Tuesday.
CrowdStrike shares rose 3.3% at $256.22 on Wednesday.
Kessinger said that while he isn’t sure exactly how Crowdstrike’s results will be affected in coming quarters, he does expect that signing up new customers will be more difficult than previously. He forecast a negative effect on second-quarter sales of about 12%.
The outage affected companies worldwide as some PC users were locked out of their Windows systems. Delta Air Lines said the outage cost it $500 million over five days and has threatened legal action against the cybersecurity company. CrowdStrike has taken responsibility for the outage but denied acting inappropriately.
“[CrowdStrike has] taken the matter extremely seriously since the moment Windows devices begun crashing, and we believe customers have taken notice,” Kessinger said. “If anyone can bounce back from this, it’s [CrowdStrike].”
CrowdStrike reports second-quarter results on 28 Aug.
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